Pragmatic Capitalism

Practical Views on Money, Finance & Life

‘Chart Of The Day’

Global Inflation Continues to Fall


This strange new world of disinflation continues.  Yesterday’s CPI reading in the USA came in at 1.7% which was down from 2%.  Core inflation (minus food and energy) was also 1.7%.  Most interestingly, this isn’t just a conspiracy by the BLS to manipulate the way inflation is gauged.  We know that because inflation isn’t just… Read More

High Debt and Low Incomes = Low Housing Demand


Here’s an interesting piece of research from the NY Fed that explains why the demand for housing remains relatively low – potential buyers just have too much debt and not enough income: The recovery continues, but it remains lumpy due to the high levels of debt and the lack of strong income growth.  The Balance… Read More

The Long View on German Bond Yields


Here’s some perspective for you on the state of the European economy.  German bond yields are at unprecedented nominal levels (via John Mauldin): While it should surprise no one, German long-term bond yields are at historic lows. I recall reading that Spanish bond yields are lower now than they have been at any other time… Read More

Deutsche Bank: Ignoring Food Price Pressures Could be a Mistake


Economists and central bankers tend to be less focused on what consumers pay at the grocery store because food and energy prices have historically been more volatile – remember, it’s just “noise”. However what they can’t ignore is how shoppers view inflation – i.e. inflation expectations. And food prices have a significant impact on households’ views on future inflation.

Update on VIX Curve Inversion


A few weeks ago, we noted the relationship between an inverted VIX curve and declines in the S&P500 (see here). Taking a longer-term view, we see that the last few years have been relatively quiet–characterized by few, intermittent inversions and minor pullbacks in the index. A larger spike than we saw last week and/or a sustained inversion between prices of the VIX and the 3-month VIX would be symptomatic of a more meaningful correction:

AAII: Equity Allocations Hit a 2014 High in July


The AAII’s July asset allocation survey showed growing overall bullishness from retail investors as equity allocations jumped to their highest levels of 2014. The current reading of 67.5% is the second highest monthly reading since the bull market began in 2009.