Deflation Upon Us

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I enjoyed my "Spotlight Session" with Tom Sosnoff yesterday afternoon. Tom spoke a lot about his fondness for bond futures these days, and I'd never really look at these charts. I was intrigued by his favorite (finally! a market exists with a clear trend!)

0731-tz

The biggest question before us, I believe, is whether inflation or deflation is going to be the course of the next few years. A lot of folks – precious metals fans in particularly, obviously – have signed up on the inflation side of the ledger.

To my way of thinking, so many indexes out there are screaming "deflation" that it's difficult to ignore. The above chart, at the very least, suggests inflation is nowhere on the horizon. Have you seen interest rates? I never thought I'd touch my 4.875% mortgage, since it was so good, but I'm going through all the paperwork right now to refinance at 3.75% – amazing! This is not an inflationary environment.

I would also note that the gold bugs index is hinting at some action very similar to what we saw in that glorious summer of 2008. Take note of the tinted areas and their relationship to each other.

0731-hui

I'm going to check out the new comments section now and see if anyone is having trouble. Have a good weekend!  

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