Bigger Fight Than ''Tastes Great Less Filling!''

January 29th, 2013

by Chris Kimble

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

If I were forced to put opinions into two camps, it seems that people are either in the "Deflation Camp" (lower growth or contraction due to over-leverage) or the Inflation Camp (high inflation, maybe hyperinflation due to excess money printing by the Fed).

The two-pack below compares a key inflation index, the Morgan Stanley Commodity Related Equity Index (CRX), against the yield on the 30-year bond (TYX). Both of them have made a series of lower highs since May of 2011. Both have rallied over the past few months, taking both of them back to key falling resistance lines.

We should know a good deal more about which camp has a better grip on reality based on how the CRX and 30-year yields handle these resistance lines.

Is this a bear trap? Or is a growth/inflation breakout close at hand? Stay tuned … this should be a big deal to a good number of investors!

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