Incrementum Inflation Signal switches to Rising Inflation
Monetary Tectonics is a phrase used by t Incrementum AG, based in Vienna, Austria, to explain the 'war' between inflationary and deflationary forces influencing the global economy and markets. Indeed the team there have developed a proprietary "inflation signal", which weighs up a handful of factors which contribute to the monetary environment markets are operating in, and eventually gives off a reading as a whole (for example "disinflation" or "rising inflation"). As per their latest update - their signal has switched to 'rising inflation', which you can see on the chart. You can also see that their previous call, that of "disinflation", made back in late August 2014 was fairly accurate, with a handful of inflation sensitive assets like struggling in the period since. That this is coming at a time where Draghi has warned of higher volatility in bonds (which we've seen of late), and where gold has largely weathered the storm of a much stronger than expected NFP is interesting, and this signal will be worth monitoring further in the weeks ahead.
Gold bull since early 2000. Have spent +20yrs working in investment analytics, research & portfolio construction. Author of two books on investing in gold and the causes of the GFC. Lover of markets, competition & technology