Belief in Inflation (And 4 or More Rate Hikes in 2018) Picks Up

Investors Increasingly believe the Fed may hike four or more times in 2018. The inflation scare is picking up steam.

Due to Federal Reserve Beige Book regional reports, investors increasingly believe the Fed will go on a rate hike spree this year.

CME Fedwatch sees things this way.

Talk of $100 Oil

Fun New Narrative

When We All Believe the Same Thing

That's my "Tweet of the Day"

Consumer Confidence

Market in Turmoil

Stagflation Anyone?

Inflation Scare

This is the same thing that happened in 2008. When oil hit $140, I recall comments like "Next stop $200, then $300".

The same sentiment is in play right now. Nearly everyone is convinced that the inflation bet is a "sure thing".

Atwater provides a study in psychology. Others look at fundamentals:Trade wars and rate hikes will slow the already slowing the global economy. We are near the end of this cycle.

Lacy Hunt at Hoisington Management is fully invested in Treasur

Comments (20)
No. 1-20
El_Tedo
El_Tedo

The FED wants to tank the markets before the mid-term elections.

Realist
Realist

How close to the “end of the cycle” are we? I’ve been listening to you say this for the last 3 years Mish. I believe we are still a year or two away, if not further. Of course, as always, this assumes that Trump doesn’t start a trade war.

Curious-Cat
Curious-Cat

Mish - I think you are right. If you are not, I would like one of your critics to please explain how we are going to have this degree of rate increase with the current massive amount of debt - consumer, government and commercial. My understanding is that much of this debt is rolled over and if that's true it will be rolled over at higher rates. If I am wrong, can someone please educate me?

AWC
AWC

I've heard the old adage many times over the years, that "The most expensive words in investing are, This time it's different." Now, all this talk about "Late Cycle" used to be valid in previous business cycles, before this "New Paradigm" cycle came along. New paradigm referring to the first "Moral Hazard Generated Cycle" we have ever known. Could it be different this time? Now that we know there are no more holds barred in what the Fed, and other Central Banks are capable of? Will they buy stocks, bonds, ETF's, Mutual Funds, State and local pensions, subprime car loans, etc? The above considered, how can we think of this as anything close to a "normal" cycle, let alone believing ourselves to be late in it?

Bam_Man
Bam_Man

The Fed is desperate to get as far above zero bound as quickly as they can. As in prior cycles, they have waited FAR, FAR too long to tighten and will now be raising rates until the economy breaks - probably no more than two or three 25bps increases from now.