April 13, 2018

If Inflation is Just 2%-3%, Why is the US Dollar Dropping Like a Brick?

The financial world is finally waking up to the fact that inflation is in fact MUCH higher than previously believed.

As we noted yesterday, the official measure of inflation, the CPI, is now clocking in at 2.4%, well above the Fed's so-called target of 2%.

This is really, REALLY bad news because the CPI is actually massaged to make inflation look LOWER than it really is.

So if CPI is at 2.4%... where is REAL inflation?

Well, the NY Fed’s “in-house” inflation measures, the UIG suggests its actually MUCH higher at 3.14%.

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Small wonder then that the $USD is dropping like a brick.

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That's an ASTONISHING 13% drop in the last 14 months.

Let me ask you... if REAL inflation is only 2-3%... why would the US Dollar be dropping like a brick this way?

This is THE Black Swan even of 2018. And the Fed is hopelessly behind the curve on it.

Best of all...

Regards.

Have a nice weekend.

Deo Talaverano.

Chief Market Strategist DHF.