Call Me Crazy
I have gotten some pushback on this thesis. The deflationary mentality is pretty entrenched. For now, the inflation is imaginary. But don’t you think it’s weird that gold, iron ore, steel rebar, and copper are rallying in the middle of what might be a bear market?
I think it’s weird.
As usual, the market is doing what nobody expected to happen. Nobody is positioned for an inflation trade. Some well-known market pundits and economists have been talking down emerging markets for years. They haven’t stopped. The thing about most people is, they always miss the turn because the bearish thesis is most compelling on the lows. And they are blind to evidence that contradicts their thesis.
All of this could be coincidence. I could be nuts. Wouldn’t be the first time.
But I have always believed that the inflation trade from 2000 to 2011 was the motive wave, and the correction from 2011 to 2016 was the corrective wave, and now we are back on the primary trend, in an inflation bull market lasting 25 years or more.
I told you I think really big picture.
Jared Dillian is editor of Mauldin Economics' The 10th Man.