The Possibility Of Deflation In 2011
Can the specter of deflation be avoided?
Can the Chinese go on without tightening finances, raising reserve requirements and trying to control inflation. Possibly yes,SC0-501 if they want total social chaos; but pragmatically no: their worst fear being a fraction of the billion Chinese following the path of social unrest, rioting and chaos. With 5000 years of history to learn from, they know better.
Can the commodities keep on going up? Possibly yes if there was infinite demand, but in reality no, as demand is limited by the needs of the population on earth and their past spending habits. Case being Greece: GDP down by 7% over 9 quarters dueto reckless spending habits. Ireland, Portugal, Belgiumare also in the pipeline. Andas dominoes keep on falling with Spain and Italy affected sometime next year, we are already seeing demand levels being rationalized.
Global Treasuries are not helping either. With the first leg down, the trend is just beginning and as they say..the trend is your friend..we will have to befriend this trend for some quarters to come...i.e. when the Fed announcesSC0-502 that Quantitative Easing No. 2 is a success and roll it back.
Taking a look at recent ThomReuters/Jefferies CRB index action, various high probability conclusions can be drawn.
Commodities are nearing some serious demand supply equilibrium levels between 340 and 360. A subsequent move lower will definitely be a prelude to the deflation specter. A less probable scenario could be a false break above 360 till the artificial demand at that level exhausts, and then a steeper fall in percentage terms. Divergences with treasuries are not looking good at all.
So another index and another conclusion that 2011 is not going to be pretty. And yes...a black swan with a white camouflage can always show up to make things interesting. But as things stand towards theSC0-451 beginning of 2011, Governments will have to come up with newer measures to ward off the threat of deflation.
THE ABOVE IS NOT TRADING ADVICE
Can the Chinese go on without tightening finances, raising reserve requirements and trying to control inflation. Possibly yes,SC0-501 if they want total social chaos; but pragmatically no: their worst fear being a fraction of the billion Chinese following the path of social unrest, rioting and chaos. With 5000 years of history to learn from, they know better.
Can the commodities keep on going up? Possibly yes if there was infinite demand, but in reality no, as demand is limited by the needs of the population on earth and their past spending habits. Case being Greece: GDP down by 7% over 9 quarters dueto reckless spending habits. Ireland, Portugal, Belgiumare also in the pipeline. Andas dominoes keep on falling with Spain and Italy affected sometime next year, we are already seeing demand levels being rationalized.
Global Treasuries are not helping either. With the first leg down, the trend is just beginning and as they say..the trend is your friend..we will have to befriend this trend for some quarters to come...i.e. when the Fed announcesSC0-502 that Quantitative Easing No. 2 is a success and roll it back.
Taking a look at recent ThomReuters/Jefferies CRB index action, various high probability conclusions can be drawn.
Commodities are nearing some serious demand supply equilibrium levels between 340 and 360. A subsequent move lower will definitely be a prelude to the deflation specter. A less probable scenario could be a false break above 360 till the artificial demand at that level exhausts, and then a steeper fall in percentage terms. Divergences with treasuries are not looking good at all.
So another index and another conclusion that 2011 is not going to be pretty. And yes...a black swan with a white camouflage can always show up to make things interesting. But as things stand towards theSC0-451 beginning of 2011, Governments will have to come up with newer measures to ward off the threat of deflation.
THE ABOVE IS NOT TRADING ADVICE
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