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Senior Advisor

reflation trade

Theme of the moment seems to be that it is all risk on. The Fed has relented on inflation targeting and the truth is that they can get pretty darn loose withoug having much inflation, although that won't keep some of the hot money from looking at commodities and other risk assets.

The speculative flows won't get a lot of economic traction but they'll be something, for some sectors. I wouldn't fight it until it is over.

Reminds me of '11 when the CRB made its all time high (hyperinflation, Greece I tell you!!!!) when nothing much really happened in reality. Although this one will be a tiny echo of that. 

All we're going to do is load up more debt with little actual impact on economic activity but that is for some future time. 

It likely will keep the can going down the road for a while.

Higher oil prices woul help the bloodbath there and get some capital investment restarted. The dollar will probably get a bit cheaper, which will help- some CBs backing away from negative rates helps.

With the trade truces and all I'd say we can probably put along at sub 3% growth for a few more quarters. Might not end until many asset prices get well ahead of that reality.

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Veteran Advisor



Stocks start the big Down adj bout mid March... To April. 

Say a 9000 to 14000 pt. Dow correction down. 

And hyperinflation takes off in all commodities. 

A lot of the global currencies become essentially worthless by 2021.

 USD is 1 of the those going a lot lower.... No other way for em to start paying their 24 trillion debt.  LoL. 






BA Deere
Honored Advisor

Re: reflation trade

I`m a recovering gold bug, "wheelbarrow of money to buy a loaf of bread" guy.  What I learned in that 2011 "QE to infinity" "helicopter Ben" and all that jazz, that created money never made it to mainstreet, it went right to Wall Street, businesses and banks put money into equities, the market pays better than hiring a new employee or giving current workers raises to bring them up to the 1980 level.  Oh I admit that everyone that can fog up a mirror has a job or two, but unless you`re in the tech sector, employers aren`t going to write a big figure on a piece of paper to snipe you away from your current employer.

The stores that are left, the service industry, I noticed there`s "help wanted" signs up, there`s 6 cash registers and only 1 or 2 open and a long 20 minute line for that one cashier, people put back items rather than wait to be checked out.  And there isn`t extra inventory, if you need size 10.5 EE boots and you`re lucky enough there`s one pair, you better snap it up, because it`ll be long gone before there`s a sale. 

I`ve often thought "they`ll print their way out of debt and that will cause inflation and the wheelbarrows of paper money will be needed" that would double commodity prices and land prices and if your money is sewn in your mattress it`ll be worthless.  The thing is Tomm Pitzenmier on Market to Market  was saying "we used to produce 70% of the world`s corn, now we only grow 30% of the world production.  And wheat, the world is always only 2 or 3 months away from a wheat harvest somewhere in the world.  What US farmers do doesn`t matter as much as it used to, so those prices we saw in 2012 we may never live long enough to see them again.

Just my opinion, I think we`re going to run the debt up until the bartender cuts us off and then public debt will be reorganized and haircuts given . T-Bills will be about the same a sewing your money in the mattress only safer from a theft.  The bank sent a letter that they no longer will be accepting less than $5 in coins and they`re going to charge 10% for taking your coins, I think walmart charges 5%.  But there`ll be more money making gimmicks like that in the future.

Senior Advisor

Re: reflation trade

No way does inflation increase by much. A big surge in the money supply is once again being met with sagging velocity, making it a big nothing except for short term traders trying to frontrun a theme.

The economy has an elephant of debt sitting on its chest and the best that can be done is to keep loading up the debt to keep inflated assets from deflating.

But da Fed's nonQE and the huge pro-cyclical deficit spending will probably keep it going for a while.

The only way you'll ever see hyperinflation is after cascading asset deflation and debt default forces the authorities to go nuclear.

But I predict they'd be behind the curve, as they always are.


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Senior Advisor

Re: reflation trade

Somewhere over the horizon is the end of the Reagan Era neoliberal strategy of driving the economy  by increasing debt and inflating assets.

That has also been contemporaneous with the massive upward transfer of wealth and income and the decline of the middle class, regardless of what the folks who robbed the bank will tell you.

Honored Advisor

Re: reflation trade

Sd --- the wealthy of the world cannot buy an american lifestyle for the poor of the world..... but we all know that but it buys votes among the less clever of the world.  


BA Mr P. is either not very knowledgeable of the corn production facts or is trying to mislead by intermingling subjects like production, exports, consumption, or just plain sources on the internet.  There is nonsense for all at your fingertips.

th-1.jpeg--- a chart of exports where we imagine that corn exports increased when both the leading producers loweredproduction drastically drastically--- when those two produce 65% of the worlds corn.... and brazil simply cannot export much more that all of it... and those little others increased exports to compensate????????  I doubt that seriously..

th-4.jpeg.......A chart that claims those little others countries consume more than they produce......

corn_odysyny_0.png........a chart from City in an article claiming information on corn production and its uses by a list of PhD's in something bloging related, that shows china does not produce corn...???


Rank Country Production in tonnes
1 USA 384.78 million
2 China 219.55 million
3 Brazil 96 million
4 European Union 60.71 million
5 Argentina 40 million
6 Ukraine 28 million
7 Mexico 27 million
8 India 26 million
9 Russia 15.31 million
10 South Africa 15.3 million


.....looks reasonable with usda data.......we see occasionally  least referencable source but every one of these claims usda sourcing.  This one seems to be on subject....

th.jpeg....... and naturally we can get data from the local "I hate GMO" site....

Every one of these charts were in promotion of a different political narrative and and few are using the same charts and information, yet all claim to be using usda data..... It is modeled on the media format of "I'll bend the usda truth for you if you will do it for me and we will both have our sources."

So BA maybe Market to Market has something.  If you only have one profit in the room at a time we have a chance to see through him.

Smiley Frustrated     Political narratives and activism are pretty much ruining a good search engines.  Or the management of search engines are flooding their own product with their personal likes and dislikes.....either way it is much harder to find good statistical information on any of the first 6 pages of a search. 


Veteran Advisor

Re: reflation trade

Don't forget to include the CIA's agricultural statistics when you create your charts (who knew that even existed??) Smiley LOL

"Corn Exports by Country

 ...Below are the 15 countries that exported the highest dollar value worth of corn during 2018.

  1. United States: US$12.9 billion (38.1% of total corn exports)
  2. Argentina: $4.2 billion (12.5%)
  3. Brazil: $4.1 billion (12.1%)
  4. Ukraine: $3.5 billion (10.3%)
  5. France: $1.7 billion (5%)
  6. Romania: $1 billion (3%)
  7. Russia: $854.4 million (2.5%)
  8. Hungary: $771.4 million (2.3%)
  9. South Africa: $452.2 million (1.3%)
  10. Canada: $406.3 million (1.2%)
  11. Mexico: $284.5 million (0.8%)
  12. Bulgaria: $276.1 million (0.8%)
  13. Serbia: $265.9 million (0.8%)
  14. Poland: $257.2 million (0.8%)
  15. India: $254.8 million (0.8%)

The listed 15 countries shipped 92.3% of global corn exports in 2018 by value.

Among the top exporters, the fastest-growing corn exporters since 2014 were: Poland (up 34.7%), Mexico (up 33.2%), Russia (up 22%) and Argentina (up 20.1%).

Those countries that posted declines in their exported corn sales were led by: India (down -69.7%), Serbia (down -47.6%), Bulgaria (down -28.5%), South Africa (down -24.9%) and France (down -20.7%)."

BA Deere
Honored Advisor

Re: reflation trade

Hey Guys, here`s a link to the Market Plus segment of Pftizenmaier where he`s a little perturbed at about 7:40 for being called a "bear" and makes the infamous statement about "US now 30% of world corn production".  It looks like in SW`s pie chart the US produced 32% of the world`s corn in 2012-13.  2012 was a drought year (last good year that I remember  🙂  )  But Chinese owned Smithfield imports Brazilian corn into Carolina ports, kind of flipping us the middle finger.  I hate to admit it, but Pftizy is partly right about 30% although maybe he gets one Pinochio ...just because he`s a bear   🙂

Veteran Advisor

Off-topic but..

I don't want to start a new thread with this, but thought that maybe @BA Deere , @Hobbyfarmer, and @sw363535 might find this "interesting": 

New live Ebola vaccine was just approved by FDA....and it can cause Ebola in the unvaccinated.  While most jamokes will just blindly accept another couple vaccines added to the 72 already mandated to be given to our kids and grandkids, the side effects include life-threatening anaphylaxis (remember the pharma companies are exempted from lawsuits for their vaccines -- you can't sue them).

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Senior Advisor

Re: reflation trade

Begs  the  question ,  how  much  of  number  3 ,  went  to  number  1 , and  that  destination  being  feed  mills  on  our  east  coast ?  

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