It looks like the October “reflation” call was just as bad as the July one – global growth continues to slow. What has become clear is how largely misunderstood deflation has been over the last 18 months. We’ve entered the most painful part of a crash in inflation expectations – the capitulation.
The CRB Index made-lower-lows -23% YTD yesterday and Oil/Copper had only bounced +0.7% and +0.2% respectively this morning, before both headed lower.
Here are a few of the components within the CRB Index that were crashing yesterday:
- Oil (WTIC) smoked for another -5.9% drop, taking its epic deflation to -42.9% year-over-year
- Natural Gas tanked another -5.2% to, taking its crash to -45.6% year-over-year
- Copper deflated another -1.4%, taking its epic deflation to -30.1% year-over-year
- Cattle prices dropped another -2.3%, taking its crash to -26.2% year-over-year
- Coffee prices got tagged for another -1.1% loss, taking its epic deflation to -31.5% year-over-year
Aren’t epic deflations and crashes fun? And don't confuse today's mixed trading as a bottom for deflation.
But, ex-all-of-it, “price stability” seems to be tracking right at the Fed’s target!