Are you ready for hot inflation?

The Fed has told us, in Fed-speak, that it is fine with inflation running hot as long as the stock bubble doesn’t burst.

During a video conference in mid-January, Fed Chair Jerome Powell stated that the Fed won’t hike rates until it sees “troubling inflation.” That was right after he admitted that “measured inflation” will arrive in the financial system soon.

The bad news for Mr. Powell is that inflation is already here… and it is anything but “measured.”

• The 5-year breakeven rates (which measures where the bond market anticipates inflation will be in five years) has exploded to an EIGHT YEAR HIGH.
• The IHS Markit U.S. Services PMI (an economic measure based on what business managers responsible for ordering raw materials expect) saw its sharpest rise in cost burdens since it began recording data in 2009.
• Food inflation, which the Fed’s own research shows is the best predictor of future inflation, is clocking in at 3.9% nearly double the Fed’s 2% target.

Moreover, the markets know all of this.

Gold has erupted higher, priced in every major currency (U.S. dollars, Euros, Yen and Francs).

The yield on the 10-year Treasury (which trades based on inflation among other things) has more than DOUBLED since August.

Put simply, the market is screaming that inflation has arrived.

Investors who are well positioned to profit from it could see literal fortunes.

Best Regards,

Graham Summers
Editor, Money & Crisis