Issue 25 – For Those Who Missed the Last Rally

The upcoming Federal Reserve interest rate decision scheduled for September 21 will probably be the last bump. I expect a 0.75% increase. It will likely be followed in months to come with a narrative shift, but will enter a long period of inertia that may last as long as a year. That is about the amount of time needed to bring demand and supply into alignment. I rest my case on six reasons: the strength of the dollar, the application of quantitative tightening, the crushing weight of energy and food, the cooling of the job market, the easing of supply constraints and the fall of industrial prices. The bond market is already predicting that the annual rate of inflation will be 2.1% by next September mainly because monetary growth is collapsing. Monetary models, which track and correlate changes in the money supply with N-GDP, are suggesting, with a 6-to-12 month lag, that the inflation rate could fall precipitously from here to more acceptable levels.


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By Hubert Marleau

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By Hubert Marleau

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