I just received a copy of John Mauldin's Outside the Box newsletter. This issue he focused on an article by John P. Hussman, Ph.D., President of Hussman Investment Trust.
The part that struck me and matches what others have posted recently is the following snippet:
"The recent inflation data is another area in which investors are magnifying the trivial. For the most part, the excitement about "moderating inflation" in recent weeks has been based on the thinnest "positive" surprises, generally on the order of rounding error. Last week's upward revision in 2 nd quarter unit labor costs threw a bit of cold water on that excitement, as year-over-year figures exceeded 5%.
Given that initial disappointment in the "inflation is going away" thesis, Friday's CPI data will be interesting. Yield curve inversions, as we have at present, have historically been associated with much higher short-term inflation pressures than normal yield curves. The consensus estimate is for a 0.2% increase in the August CPI. My guess (which we don't invest on and neither should you) is that the actual figure will come in well above that. In any case, despite the fact that monthly CPI data is fairly noisy, a favorable surprise may be harder to come by this time around."
Thoughts or comments?
(On Friday 07 Sep, I went short 2 ZB's at 110 23 and I'm still holding.)
