Desperately seeking inflation
May CPI was released this morning and came in below expectations at 0.1% over April and 2.4% over a year ago May.
Markets are pleased but media are beside themselves, having carpet-bombed readers listeners and viewers with their tariffs-are-inflationary propaganda for months. As Financology readers know, Tariffs Are Not Inflationary.
This morning PPI also came in below expectations at 0.1% month-over-month and 2.6% year-over-year.
CNN gets it backwards:
https://stocks.apple.com/AkboAqO8rT-iKefBDJ024Og
“If there is weak demand for 30-year bonds at Thursday’s auction, that would push yields higher.”
Weak compared to what? They’re putting up $22B in bonds in one auction, in the context of some $2T net sales annually. Ya don’t think overwhelming supply might be the real problem?
With the American financial media holding its breath waiting for stocks to reclaim their all time highs, stocks have already done it.
Huh? The US media parochially assume “stocks” means “US stocks”. And indeed they haven’t yet made it back to their February highs. But stocks as a whole have – closing at an all time high today – thanks to the outperformance of the rest of the world market.
Financology has been watching for this development for some time, based on the excessively high valuations reached by US stocks over the past decade or so. They’ve essentially pulled forward much of the next decade or so’s returns. We last took a look this in Long Term Asset Class Outlook. More recently, Charles Schwab has weighed in much to the same effect, tipping XS to outperform US over the next decade or so.
What’s the 10-Year Outlook for Major Asset Classes?
When it comes to stocks, global diversification is as important as ever.
OK, Israel just hit Iran………….THEY want inflation
Also i saw the headline that “Trump may have to order the FED to cut rates”.
THEY WANT INFLATION
Oh absolutely we have inflation because powerful people want it. They pretend it just comes out of nowhere, because economic “growth” is too fast, or because of bad weather or malevolent foreign actors. And governments and central banks are fighting it.
No. They’re creating it.
Is AI inflationary Or Deflationary?
The Israel-Iran war outbreak has gold and oil soaring today. With stocks down sharply, our Financology model portfolios are holding up pretty well due to gains in allocations to gold (IAU) and commodities (COMT) offsetting much of the declines in stocks and bonds.
COMT especially is up sharply due to broadly tracking the energy-heavy SPGSCI.
Escalating war may also take my hypothesis that gold will trade under $3000 before exceeding $4000 out of the running.
Looks like Tyler is reading Finster:
‘Tariff Derangement Sydrome’ Remains As UMich Sentiment Surges In Early June
Iran strikes back, claimed to have shot down 2 F35 & caught one female fighter pilot & Israel is now under a large attack………….
What a mess. Now we have two full-fledged regional wars. History may look back on this as part of WWWIII. IMO one more theater would do it.
Trump was “Negotiate” with Iran……………….then attacked!
He has lost ALL creditability Russia/China/India etc might as well as fight rather than talk.
It’s the proverbial fog of war. Almost nothing you don’t know directly you just don’t know. Some postulate that the negotiations were a deliberate strategy to encourage complacency prior to the attack. Others say the Trump admin had given the Iranian regime 60 days to come to an agreement and that the 60 days were up.
I’m not a geopolitics guy but from where I sit nuclear proliferation is a grave issue that has received too little attention over the years. If indeed this prevents Iran from going nuclear it may turn out to have been worth it. On the other hand, how do we know for sure Iran was on the verge of going nuclear? Remember GWB’s insistence the US had to go after Saddam Hussein because of WMDs? Then where were the WMDs?
Bottom line, we just don’t know what the truth is and isn’t. We can’t.
IMHO the Ukraine situation is clearer. The US has squandered a golden opportunity to develop better relations with Russia. It doesn’t have to be an enemy, unless we make it one. And what benefits has the world missed out on? If the west were on better terms with Russia, maybe Iran wouldn’t be as big a problem. Or North Korea. Or even China.
I think we can really can all get along better then this.
Nukes = No Western abuse……….Oh & the West is quite happy (& helped) that Pakistan got them, keep India in check.
This is concerning.
“The CIA at this moment still assesses that Iran does not produce a bomb, and was likely not actively seeking it.”
https://www.zerohedge.com/geopolitical/israel-proclaims-total-air-superiority-over-iranian-capital-area-war-intensifies
If true, this war is nothing but senseless death and destruction. Others say the opposite. So it’s a he-said-she-said kind of thing. These days I don’t trust anything I hear in the media, least of all from governments and least of all in the fog of war.
https://www.telegraph.co.uk/business/2025/06/14/mark-carney-conversion-eco-warrior-to-oil-and-gas-champion/
Mark Carney’s conversion from eco warrior to oil and gas champion
Former Bank of England governor aims to turn Canada into an energy superpower
Once considered the Bank of England’s greenest-ever governor, Mark Carney has seemingly undergone a Damascene conversion.
During his time at Threadneedle Street, he called on the world to leave 80pc of oil and gas in the ground.
But now, as Canada’s new prime minister, he wants to pump as much as he can to protect the country’s economy from Donald Trump’s trade war.
Canada is going to become an energy powerhouse, Carney told reporters last week. And he didn’t mean just in renewables.
“When I talk about being an energy superpower, I mean in both clean and conventional energies,” he said. “And yes, that does mean oil and gas.
“It means using our oil and gas here in Canada to displace imports wherever possible, particularly from the United States.
“It makes no sense to be sending that money south of the border or across the ocean, so yes, it also means more oil and gas exports – without question.”
These comments are remarkable given they come from a man who repeatedly called for an end to drilling during his tenure as Bank governor between 2013 and 2020.
One such call came in a 2015 speech at Lloyds of London, when he described 80pc of the world’s known fossil fuel reserves as “unburnable”.
He said: “The catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors – imposing a cost on future generations that the current generation has no incentive to fix.”
Given Carney’s influence, his dramatic warnings inevitably shaped UK government decision-making at the time, as he championed the cause of net zero to a total of five different energy secretaries.
Claire Perry, who served as Tory energy minister between 2017 and 2018, recalls: “Mark had a huge impact on global climate issues.
“He created all the momentum around carbon markets and energy transition investment.”
Sir Ed Davey, the Liberal Democrat leader who served as energy secretary in the 2012-15 coalition government, echoes this.
“Mark Carney had a real understanding of where the wind was blowing globally on energy, and recognised the risks to the economy of over-reliance on fossil fuels,” he says.
After leaving the Bank, Carney also wrote a book called Value(s): An Economist’s Guide to Everything That Matters, where he advocated powerfully for the introduction of carbon taxes.
“One of the most important initiatives is carbon pricing,” he wrote. “The best approach is a revenue-neutral, progressive carbon tax.”
The UK has since faithfully implemented that plan with a raft of carbon levies on consumers and industry, which many argue has left Britain burdened by some of the highest energy prices in the world.
‘Energy superpower’
Jump ahead to 2025, however, and Carney – now a Canadian politician instead of a British bureaucrat – has adopted a wildly different approach.
Immediately after succeeding Justin Trudeau as prime minister and winning Canada’s election in April, he wasted no time in signing a directive cancelling Canada’s existing carbon tax and confirming rebates for many of those who had paid it.
He’s now gone even further by pledging to build oil and gas pipelines, LNG export terminals, and to relax the emissions restrictions that have angered many of Canada’s biggest fossil fuels producers.
And his plans don’t stop there.
“All this is not enough just to make Canada an energy superpower,” he said. “It’s not enough to build our full potential.
“It’s not enough to truly get incomes growing across the country. We can do much more. We are going to be very, very ambitious. Build, big, build, bold.”
Carney, who also previously ran the Bank of Canada, reconciles such ambitions with simultaneous pledges on green technologies that could theoretically reduce emissions, such as carbon capture and storage. But these will take years or decades to implement.
According to experts, Carney’s conversation has been driven by the economy, as oil and gas accounted for up to 7.5pc of the country’s GDP in recent years.
In 2023, crude oil exports alone were valued at $124bn, representing 16pc of Canada’s total exports. That figure rises to 20pc if gas exports are included.
What’s more, Canada has about 171bn barrels of oil in recoverable reserves – far greater than America’s 44bn.
It means Canada can rely on oil for decades, whereas US production is expected to peak in the next few years.
However, most of that oil and gas comes from one province, Alberta.
That region alone holds billions of dollars, although its voters blame Carney’s and Trudeau’s Liberal party for climate restrictions that curbed economic growth.
A recent opinion piece for Canada’s Globe and Mail by Preston Manning, a retired politician who helped found Canada’s conservative movement, warned that his 5m fellow Albertans had had enough of rule from Ottawa and were considering secession.
Some go further.
Alberta, they point out, shares a border with the US and perhaps has more in common with the likes of Texas than Toronto.
These growing tensions have created a political opportunity for Alberta’s conservative leaders.
Independence referendum
Less than 24 hours after Carney’s election, Danielle Smith, Alberta’s premier, introduced a bill to the province’s legislature, making it much easier for a citizens’ movement to trigger an independence referendum.
The new rules slash the number of citizens’ signatures required to trigger a referendum, from 600,000 to 177,000 and give petitioners 120 days to collect them rather than the previous 90.
She has done so to pile pressure on Carney, handing him a list of nine energy-related federal laws she wants overhauled to unleash more drilling in Alberta.
“We cannot keep the over $9 trillion worth of oil wealth we have in the ground,” she said. “Mark Carney has acknowledged that the federal government must address key policy barriers.
“That must include abandoning the unconstitutional oil and gas production cap, repealing the tanker ban, and scrapping Canada’s net-zero power regulations.
“I believe in a strong and sovereign Alberta within a united Canada, but we cannot persist with the status quo. I won’t allow that status quo to continue.”
Smith is also exploiting the tensions generated by Donald Trump, the US president, whose talk of making Canada the 51st state resonates with some Albertans.
She sees her demands as a test of the scale of Carney’s commitment to oil and gas: “Given his past actions, I’ve asked myself what version of Mark Carney are we going to get.
“Will we get the pragmatic Bank of Canada governor Mark Carney? Or will we get the environmental extremist keep-it-in-the-ground Mark Carney?
“I don’t know the answer yet. He’s saying some of the right things, but we need to see meaningful action.”
Such tensions have been around for a long time. What Canada’s politicians say and do are often very different things, says Brendan Long, a leading energy analyst and Canadian, whose new book Energy Shocks, compares the politics of energy in the UK, US and Canada.
He points out that Canada has a long history of electing prime ministers with stridently green manifestos who then preside over huge increases in oil and gas production.
“While previous premier Justin Trudeau had explicitly anti-fossil fuel agendas, domestic Canadian oil and gas production grew dramatically under his leadership,” he said.
“Today, Canada is ranked fourth in terms of global oil production at 5.8m barrels of oil per day and growing.”
By contrast, Long points out that the UK is the only large global oil producer to have deliberately cut its production in recent years, signalling the long-standing net-zero legacy left by Carney.
“It means that while Canada’s oil and gas industry is ramping up production under Carney, the UK remains aligned with the anti-oil and gas ideology he promoted when he was the governor of the Bank of England,” he says.
Mega’s dispatch from England:- Land of confusion
With news changing moment by moment so i wont go into detail.
Everyone here is some what surprized to see the Israel attack on Iran, now even more surprized to find Blighty is to send forces to protect Israel, after Israel begged for help.
It is the end of Trump as a political leader, he agreed to a meeting with Iran on Sunday, then attacked. He than grandstanded about how he sucker punched Iran…….Iran has got up & hit back!
I simply don’t get it?
Iran IS hitting Israel hard, did Trump think that he could wipe Iran off the board?
I see clear evidence of Israel booming “Missile sites”…….i note no 2nd explosions thus they hit decoys.
I say the collective WEST are now in meltdown panic, the wet dream of a sudden strike would bring results ……it wont.
We are now going down a path that no one knows where it goes…………
Things look no clearer from here. Last week Trump reportedly declined to supply Israel with the “bunker buster” bombs that might damage the Fordow underground uranium enrichment facility. If the objective were to disrupt Iran’s nuke development it would have made sense to supply them. Meanwhile we have reports that “The CIA at this moment still assesses that Iran does not produce a bomb, and was likely not actively seeking it.”
If the objective isn’t to disrupt Irans’s nuke development, if even there is one to disrupt, then what is it? Why would the west be aiding Israel but at the same time pulling punches that might actually get it over with?
Is the goal actually just to have a war that drags on?
Trump is now moving the USS Nimitz into the area, given that its its last planed voyage & decommissioning a nuke powered carrier is rather expensive, i be rather worried if i where on that ship…… (Uss Liberty type worried ).
I noticed last week that the unwashed scum we call the government here in blighty was suddenly giving out money…………eg the free winter fuel allowance. Suddenly they seem more “relaxed” ref balance of payments ……..i suspect that Trump might have cut a deal with them.
As for the attack, it puts me in mind of the Bay of Pigs, but unlike JFK he cant walk away
Nice of them to think about the little people…………
https://www.carscoops.com/2025/06/affordable-car-crisis-has-eus-industry-giants-calling-for-a-radical-new-category/
Surprized Gold has not gone to $4000………….
I had expected it to go to $3000 first, but at the rate things are going that’s looking less and less likely.
It’s not just an amorphous “fear” trade … governments’ favorite way to finance war is inflation.
When all else falls they take you to war
Trump in trouble……………………MAGA+AOC !
Its happening!
Trump in trouble……………..MAGA+AOC…….Yes its happening
War Update:- Iran hangs in there, Israelis rebel, DNC plots……….