The financial media and those in the blogosphere along with social media has been speculating that due to the current methodologies utilized by the Federal Reserve and BLS perhaps, just perhaps, disinflation might have arrived or will so in the very near future.
I’m not ready to bury that this current cycle of inflation is completely dead yet as I’ve witnessed the price increases first hand to intermediate manufacturers and ultimately consumers from the first wave of tariffs.
All of this with Tariff War 2.0 just beginning and likely to accelerate on April 2nd.
As long as gold is reaching new all time highs on an almost weekly basis, cattle at all time highs, coffee still flirting around all time highs, and China apparently starting to create a new stockpile potentially in preparation for a conflict which could result in sanctions, it is difficult to call the war on inflation over, much less the start of disinflation or even deflation.
Dr. Copper is one of this author’s favorite commodities to watch for whether or not disinflation is in the air and he doesn’t smell a thing.
This particular chart starts in 2000 with the .com insanity and illustrates that Dr. Copper usually leads sticky CPI and not vice-versa. Until the price of copper and copper products starts to rollover, it is difficult to believe that PCE nor the Atlanta Fed Sticky CPI will drop below 2.5% any time soon.
The risk is only magnified as the tariff wars heat up and the risk of another policy mistake by the Washington, DC clown posse or Federal reserve increases with each miscalculation. Stay tuned as the next ninety days will tell the tale of the tape.
