Distorted Reality

"They don't have the will to slay inflation"

"I still believe we’re going to have higher inflation than most people believe. And much of that is going to help those people who are worried."

- The despicable Larry Fink

Classic economist vs normal person exchange

Dave Rosenberg's talking about models, and rates of change. The host is talking about reality - normal people have to survive on price LEVELS.

ROSENBERG: There's practically no inflation in the system…what is the conclusion either in theory or practice that could ever lead you to an inflationary view when you have 140 basis point gap between the supply side of the economy and the demand side of the economy?  In fact, when we run these numbers through our model, it's telling us we're going to finish this year with inflation close to 1% from three today.

HOST: Yeah, I hope you're right about inflation, because as a consumer I am not seeing it. Every time I go to Costco I'm dropping five or six hundred bucks, and it's like…

ROSENBERG: Inflation is not a level, okay? Inflation is a rate of change…it's not about the level. The level of pricing is extremely high, no doubt about it, but inflation ultimately is not a level concept it's a rate of change, and the rate of change is subsiding now.

Sold to you

Via Grant’s:

U.S. households have allocated 35% of their financial assets to equities, Bloomberg found earlier this month, topping the 33% share logged at the dot.com bubble peak and the 25% seen in 2013, when the S&P first managed to push back above its pre-2008 high-water mark. 

Another key constituency, meanwhile, opts for a different approach. Citing data firm Verity, the Financial Times relayed Monday that the ratio of insider sellers to buyers in the lynchpin technology sector stands at roughly 13:1 in the quarter to date, a ratio topped only twice in the past decade and comparing to less than 5:1 throughout 2022 as the market endured its post-Covid downshift.