Name That Tune

PPI came in negative again this morning. ECRI shows that the US is actually leading the race to become the next Japan when inflation is compared on a consistent metric – harmonized CPI.

Despite the Fed’s best efforts (to say nothing of the ECB’s) the trend is clear. Japanese consumer prices are experiencing a temporary “pop” due to yen depreciation, attributable to Abenomics. Even though Abenomics is in the process of failing, as wages are not rising despite jawboning from government, the weaker yen is helping to export Japanese deflation to the US and Europe.

Needless to say, this trend is being ignored by the market which apparently believesĀ  Bernanke’s assertion that the printing press controls inflation. As a result, long Treasuries – that most hated of asset classes – are, in my view, greatly undervalued.

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