It’s odd when economic forecasters fall over themselves to upgrade or downgrade outlooks all within three months of one another.
We will soon see what kind of hilarity ensures from the Key Stone Cops known to the world as Central Bankers when the interest rate hiking cycle begins.
Our suspicion is that we won’t need harnesses, tie backs or grappling hooks to scale the heights of the rolling hills that stand before us.
As we have noted in this space for some time now, even with a hike of 100 basis points the level of monetary accommodation would still stand at historically high levels.
While we are on the topic of historic activity lets take a moment to remind ourselves how global diversified corporations have faired thanks to the afore mentioned highly accommodative policies.
For ease let’s use the S&P 500 – fairly diversified and lots of global exposure.
If we take this chart at face value we should expect to see S&P prices challenge the 1400 level some time soon. The world, you see, is denominated in USD $ and so when our policies destroy its value other things compensate with rising nominal prices. This can readily be seen in the commodity complex where almost everything from Silver to Cotton gets a price boost due to the USD drop into the basement. If you make $ in other currencies and repatriate you make $ on the $ conversation…
Wash, Rinse Repeat…
Oh AND – Did we mention that German export hit record levels this morning?