More inflation signals appear every day but look at what is on fire plus an important note on silver.
On Fire!
July 27 (King World News) – Peter Boockvar: While commodity prices are only one component of the inflation debate, albeit a notable one, the CRB index yesterday closed at the highest level in 6 years and the CRB raw industrials index closed at a fresh 10 yr high.
CRB Hits Highest Level In 6 Years!
CRB Raw Industrial Hits Fresh 10 Year High!
Record Low Real Yields
Yes, the 10 yr REAL yield is at a fresh record low at -1.14% dating back to the beginning of the TIPS market in 1997 with the Fed owning about 25% of the TIPS outstanding (so plenty of manipulation here but the private market still holds 75%) but in the 1970’s it was consistently minus 3-4% and I think that is where we are headed as the Fed will continue to suppress interest rates in the face of persistently higher inflation.
US 10 Year Real Yield Tumbles To Record Low -1.14%!
The only interpretation of this leg lower in real rates that makes sense to me is this is a reflection of the stagflationary environment we are now in. Quite the central bank challenge.
With Chinese stocks getting slammed again, the Chinese government is heading towards a crucial moment of losing total confidence in its capital markets and the importance of their private sector and we’ll see rather soon I believe how they respond. Because a strong economy and global companies are very important to them, I do think they’ll back off but there is no question damage has been done that will take time to heal, if it even can under Xi…
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Weakest Since 2009
… The comments on online retailing were interesting ahead of Amazon’s earnings release on Thursday, “Internet sales were flat in the year to July. With growth slowing for the 5th consecutive month, the balance in July was the weakest since the question was first asked in August 2009. Retailers expect internet sales to pick up next month, but growth is expected to remain well below the long run average.” This data is not market moving but remains a good anecdote.
You can bring a horse to water but… The ECB keeps raining money from the sky but it doesn’t mean loan growth will grow if there isn’t much need for it. In June, loans to companies were up just 1.9% y/o/y off a very easy comp and that is a nominal rate. Loan growth to households grew by 4% y/o/y led by housing and credit cards but is really just in line with nominal GDP growth.
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Junior Silver Miners vs Silver
Graddy Out Of Sweden: I think this massive purple inverse head & shoulders is for real. The move is coming. In a bull, miners outperform metals. It looks to me like we have recharged some energy in this chart now with the latest drop in miners+metals.
Junior Silver Stocks Set To Outperform Price Of Silver
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