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No matter where you go, there that stubborn ole inflation data is. ..

‘He Who Sees No Bubbles’ (Bernanke) will continue to have to face both pending inflation data and continued populist pressures to arrest it.

A lot of people are asking me why the US Dollar has strengthened in the last few days. While it has been ignored by Bernanke, that certainly doesn’t mean this continued REFLATION in the CPI data ceases to exist.

In the chart below, Matt Hedrick and I show what we have been calling for – a Reflation Rotation in the reported Consumer Price Inflation data. The green arrow is what sucked Bernanke into this Great Depressionista narrative. The red arrow is how wrong he has been in forecasting The New Reality. Burning the Buck is, in the end, inflationary. Here are the facts:

  1. October CPI was reported sequentially higher than last month by +0.3%
  2. October CPI was reported at -0.2% year-over-year
  3. July CPI remains the low for this cycle of reported “deflation” at -2.1% (hardly a Great Depression in prices)

Notwithstanding that the calculation for America CPI is ridiculous (they have changed it 9x since 1996), if I accept the Federal Government’s word for it, I still see a rotation from deflation to inflation, using their numbers!

On the margin, for those who are not paid to be willfully blind, this chart is hawkish.

On the margin, hawkish inflation data is bullish for the US Dollar as ‘He Who Sees No Bubbles’ claims to be “data dependent.”


Keith R. McCullough
Chief Executive Officer

Reflation Rotation: Dollar Bullish ...  - cpi