Thursday, May 20, 2010

IS THE RISK OF DEFLATION RISING AGAIN?


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IS THE RISK OF DEFLATION RISING AGAIN?

Last week, I advised that the unusual rallies in the dollar and gold this year may be a warning sign that deflationary winds are starting to blow harder. Historically, one falls as the other rises. The fact that both are climbing suggests the markets are worried about deflation...again. Today's report on April consumer prices only strengthens the case for thinking that the "D" risk is climbing once more. It may be a false warning, but it's getting harder to ignore.

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