Inflation Consensus?

Barron’s Mike Santoli writes:

"It’s fashionable on Wall Street to strike a maverick’s pose and carp that "nobody" recognizes the real threat of inflation that’s being papered-over by the supposed deceit of government data pushers. Yet the just-released Merrill Lynch fund-manager survey for June shows a net 47% of respondents saying core inflation will be higher in the next year, up from a net 11% in March.

So, looking for more inflation is anything but a contrarian stance. And if there’s a buildup of inflationary danger, it’s in the process of being absorbed by the market."

Mike raises an interesting point here about the crowd’s view of inflation: What once was the subversive contrary stance — Inflation is stronger than reported, and the BLS data is "uninformative" — has gained traction amongst alot of the crowd.

As he notes above, most of Wall St economist’s think inflation is low and going higher. 

My view is the precise opposite of that: Inflation HAS been high, and its likely to go lower as the economy decelerates.

I’m not sure why that cadre of economists thinks core inflation is going up — unless they are convinced the 2H acceleration is on schedule (despite the recent CFO survey saying they are cutting back on Cap Ex and hiring).

Perhaps its due to China, the supposed exporter of Deflation, is now exporting Inflation

The very obvious slowing of GDP should certainly shave off some CPi/PPi inflation pressures — but that doesn’t change the reality that inflation is higher than has been reported. And if the crowd has finally discovered that, well, its about time.

I never attempt to be contrarian for its own sake — but I do like to know how "built in" my views are. And Mike raises a valid issue . . .

>

Source:
Liquid Courage?
MICHAEL SANTOLI
Barron’s, June 18, 2007
STREETWISE 
http://online.barrons.com/article/SB118137051073830193.html   

 China’s Inflation Accelerates,  Adding Rate Pressure
By Nipa Piboontanasawat,
Bloomberg, March 13 2007
http://www.bloomberg.com/apps/news?pid=email_en&refer=&sid=aAN9tDEhA9Mk

Category: Commodities, Federal Reserve, Fixed Income/Interest Rates, Inflation, Psychology

Rocco DeLuca & The Burden

I_trust_you_to_kill_me
Rocco DeLuca & The Burden
have put out the most interesting new rock album I’ve heard in some time: I Trust You To Kill Me.

Their sound is original — jangly roots-rock romp laced with bluegrass
and countrified leanings.

I agree with the reviewer who wrote that their bluesy debut album "fairly vibrates on DeLuca’s Dobro steel guitar and throaty wail."

DeLuca careens from influence to influence, paying homage to his predecessors and then going a step further.

The music is flavored with dollops of Jeff Buckley, Coldplay and
most of all, Bron Y-Aur Stomp Led Zeppelin.

I Trust You To Kill Me is one of those rare discs where there in not a single weak cut on the CD.

The band’s Myspace page has four songs to stream.

The band has been opening for the likes of Ben Folds and John Mayer.  The next area show I could find is
Tue Jul 31st 2007, Bowery Ballroom, NY

~~~

Videos below

Read More

Category: Digital Media, Music

Media Appearance: Kudlow & Company (6/19/07)

Category: Media

Yahoo! Gone in 12 Months?

Category: Corporate Management, Finance, Financial Press, M&A

Most Over/UnderValued U.S. Housing Markets

Yesterday, we learned that the NAHB Housing Market Index, a gauge of home-builder confidence, declined to its lowest reading since the 1991 recession:

Hmi_index

Source: NAHB, Wells Fargo

>
Given the high inventory still around, its no surprise that all three components of index dropped: Single-family Home Sales fell to 29 (from 31); Traffic of Prospective Buyers droped to 21 from 22; Expected Sales for the next Six Months declined to 39 from 41.

The last time the HMI was this low was in the throes of the 1990-91 recession.

Rather than spend much time on this well-covered report, I want to draw your attention to a little followed report on Home Valuation. I stumbled across this extremely informative analysis, filled with great
info-porn maps (below) from Global Insight and National City
Corporation.

It looks at the regions of the country which have had the greatest home price appreciation and, by their measures, are the most overvalued.

First the good news: less homes are overvalued today than in 2005, when the study found 45% of all homes 23% of homes were overvalued by 45%.

Today, 14% of homes for sale are still overvalued — but by only 25%:

Overvalued

The following shows where the overvalued/undervalued homes are located:

Housing_over_under_valuation

That decrease in overvaluation comes as no surprise: The huge overhang of inventory = price decreases (see  below).

Thus, many of the over-valued regions are becoming a little less overvalued.

But, depsite the hopes of the bottom-callers, there is still a ways to go.

Source:

Full Study: House Prices in America – Q1 2007
A Global Insight / National City Corporation, June 2007
http://www.globalinsight.com/Highlight/HighlightDetail2350.htm

2006 Q1 PDF: http://www.globalinsight.com/gcpath/1Q2006report.pdf

>

additional graphs, and a summary of the report, after the jump

Read More

Category: Data Analysis, Economy, Real Estate

Media Praise for The Big Picture

Category: Uncategorized

Blog Review: Augur, blogger

Category: Financial Press, Media, Weblogs

Delving Deeper into the Inflation Issue

Category: Data Analysis, Federal Reserve, Fixed Income/Interest Rates, Inflation

Weekend Linkfest: Week in Preview

Category: Weblogs

Cognitive Biases: A Short List

Category: Psychology