A nice follow-up here on our earlier piece. David Rosenberg has really nailed the macro picture in terms of inflation and deflation. In today’s piece, he highlighted 11 reasons why deflation remains the greater risk. Of note is the Taco Bell comment – very important to the global economy and a clear sign of global deflation (Rosy has a great sense of humor despite his bearish outlook):
- Credit is contracting.
- Wage rates are stagnating.
- Money supply growth is vanishing
- The U.S. dollar is strong.
- Commodities have peaked.
- U.S. home prices are rolling over … again.
- Lumber prices tumbling (down nearly 17% from April 2010 highs)
- Wal-Mart is cutting prices on 10,000 items.
- Home Depot just cut prices on flowers, fertilizers, lawn equipment and outdoor furniture.
- Taco Bell is offering two dollar combo meals.
- The April U.S. retail sales report hinted at deflation in groceries, electronics, apparel and sporting goods.
Source: Gluskin Sheff