Time for our CTUP quarterly inflation gauge. Regular readers know that we like to look at five market lead indicators for inflation. Here’s what we found:
* Commodities index. The real-time CRB index of roughly two dozen commodities from coal to copper to corn shows an upward trend in prices. The index is at 320 when it should be at about 300.
* Ten-Year Treasury Bill Interest Rate
The interest rate on the 10-year Treasury has been nudging up and now stands at 4.3%. When Trump left office it was a little over 1%. The market foresees inflation at roughly 4% right now.
* Gold Price
Gold is still one of the best hedges against inflation. The price of gold remains in the $1,900 to $2,000 range. Not much sign of inflationary expectations here.
* TIPS spread
TIPs is a bond that pays out an interest rate equal to the market's 10-year expectation for inflation based upon Treasury securities interest rates. It is showing inflation running at about 2.3%.
*M2 Money Supply
This chart shows the giant increase in dollar creation in 2020 and 2021 and the slight pullback in 2023. Since inflation is too many dollars chasing too few goods, this decline in M2 is a check on inflation, but there’s still a lot of cheap money sloshing around out there.
Our bottom line: we aren’t out of the woods on "Bidenflation" and we see inflation at or above 4% for the foreseeable future. That’s twice the Fed target rate of 2%.
The best policy remedy: cut several trillion off government spending programs—as soon as possible.
2) How America Can Retaliate Against OPEC and Putin
The Saudi oil sheiks and Vladimir Putin are all smiles that their cartel strategy is working: they’ve driven the world oil price up from $70 a barrel to $87 a barrel this week.
This higher oil price is a multi-billion-dollar income transfer, or a "tax" paid to OPEC nations and Russia while the rest of the world — particularly the United States — pays the ransom.
A major reason for the price hike is that OPEC has cut production close to one million barrels a day, while the Russians have cut production by around 300,000 barrels.
We feel like pulling our hair out. This nefarious plot by OPEC is SO easy to foil. We at CTUP have just crunched the numbers and we find that the Biden war on American energy has reduced domestic oil production by roughly THREE MILLION barrels per day from where we would be if we stuck with the Trump pro-drilling strategy.
This means our additional domestic drilling would likely produce twice as much oil as the OPEC/Russia have cut.
We could easily reduce the price of gas at the pump by $1 a gallon with a pro-America energy strategy.
If this isn’t the dumbest American policy ever – we would hate to hear what’s dumber.
3) Biden Administration Declares War On Alaskan Oil and Gas
Hold on. Maybe there is a dumber policy. Yesterday the Biden administration dealt a massive blow to Alaskan oil and gas.
Biden has canceled leases covering 430,000 acres, banned oil and gas production on another 2.8 million acres, and imposed draconian regs amounting to a near-ban on another 10 million acres.
This is happening right when oil prices have spiked again and while Biden is begging OPEC to produce more and playing footsie with Venezuela. Biden is like the hapless football player who picks up a fumble, gets confused, and runs with the ball 80 yards into his own end zone.
Ok, we will say this for the umpteenth time: The overwhelming evidence shows that wearing a mask does NOT reduce the spread of COVID-19 or keep you healthy. But politicians and bureaucrats love ordering people to wear masks – despite zero evidence that there is any health benefit. Now we're seeing an epidemic of government-imposed mask mandates. In colleges, grade schools, public buildings, airlines, transit buses, and stores.
Thankfully, Ohio Senator JD Vance wants to end mask madness with his Freedom to Breathe amendment. He is going to attempt to bring the bill for a vote on the Senate floor as early as today. The bill would ban federal mask mandates on airplanes, in schools, etc. Democrats are expected to object.
They've learned NOTHING about COVID-19 prevention in three years.
The mandate is especially foolish now, because three years after COVID first emerged, nearly everyone has had it or been exposed to it.
Kudos Senator Vance and let's hope a few Senate Democrats reject the pointless mandates.
