Inflation on the Rise?
As the stock market continues to defy gravity and “melt up”, it is important not to ignore the bond market which may be at the beginning of a “melt down”. We will discuss some of the reasons this may be occurring. In 2017, the rhetoric to boost the economy from President Trump was very aggressive. Plans to boost infrastructure spending as well as a cut in taxes were discussed as ways to jump start the economy. Concerns were raised these actions would result in both higher rates and an increase in inflation. However, 2017 turned out to be a very different story. Throughout last year, we saw little from Washington to stimulate growth. In fact, we didn’t see tax reform until the end of the year and no progress on rebuilding our infrastructure. Furthermore, unemployment remained low, and we saw little in terms of wage growth. The result was reporting from the Federal Reserve on core CPI (a measure of inflation) below their 2% target. As we entered 2018, most signs indi...