Another great day for the stock market. It’s not an easy job being right all the time, but someone’s gotta do it. Yesterday, Brian McMorris wrote an article on Seeking Alpha where he purports that we’re in a so called ‘deflationary spiral’. He writes
Deflationary spirals are self-feeding and there is little to stop them. People will spend less and less first through fear, and later because they are unemployed and have nothing left to spend. Unfortunately for this country, we just elected a president who does not get this (not that the previous one did either). Raising taxes into a depression is a very bad idea.
This is wrong.
Surging commodity and gas prices is further evidence the deflationary spiral is bunk. The graphs below show how gas prices, wheat, soy beans, oil, and core prices and corn have all risen in lockstep-just like they did in the 2002-2007 bull market. This is not only bullish for stocks like MOT POT and IPI, but the entire economy and stock market as a whole because inflation is a byproduct of economic growth.
Core prices have remained stable for the past few years, and have recently ticked higher.
Grain and Oil prices also rising in lockstep. No signs of a deflationary spiral because prices have stabalized.
On the other side of the spectrum you have casandras predicting hyperinflation due to quantitative easing, which I will debunk at a later time. Making unsubstanciated, rash claims such as ‘deflationary spiral’ doesn’t lend to ones credibility, and should be avoided by seeking alpha authors.
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