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Breakingviews: The tide of disinflation

Monday, October 06, 2014 - 03:47

Oct. 6 - The great divergence may be about to come to an end. For investors in almost everything but the safest bonds, that is bad news.

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I don't led the way oil is following now stocks may be joining the dis inflationary bandwagon that's the opinion of breaking -- is that you know senator Edward had -- -- in the Syria. I'm asset price disinflation. I've been expecting you think. Yet the way I look at it is that we've had disinflation for almost twenty years in consumer prices. And it's been the trend it in my opinion no one's really been able to explain persuasively. And the exception of terms of all crisis has been acid prices you've basically been going up. And we've now seen commodity prices roll over in a pretty significant way of oil which was completely constant for about a year and a half at 110 to 115 now below work. Edging down to nine. And stocks may be turning our -- certainly send it to you if you think this looks like a trend is that you're trying to find a trend. No I think that there is a trend of disinflation we don't really understand exactly what causes it demographics slowing growth. Labor market rigidities who knows and it sit in a way it was irrational that it didn't hit on the asset prices also assassin prices become very elevated. We can see central banks has something to do that they were pushing money into the asked him into the system. And it found its going to -- prices but not into retail prices. Now it seems to be finding its way out of most asset prices. And so there's lots of money coming -- still but. Not prices are now falling -- -- be so easily say monetary policy is that is that. A good explanation for this. You're just all of it -- some of us right back and salads. Yeah and you know people are saying well the reason these gas prices are falling that stocks are down he's because of the impending end of fed monetary policy. For you find is it's a little bit like come teething pain if you ever have a little baby you discover that they have teething pain. Either before during or after their teeth coming in I even have any time. Monetary policy affects gas prices before during or after it takes effect I you can always explain any change in asset prices up or down by monetary policy. I just think at this point monetary policy isn't very good explanation it's very loose around the world and asked -- prices are falling and and I guess. If you are. I'm an asset manager or an investment manager. The -- the message you get from this the message you wanna tell declines is. And get out of most of these SA processed since. And the only safe one as -- -- usein in the in the lead here is as it is is the -- market safe government bonds are bonds. Go up from here that could could well be over yields are extremely unattractive so maybe -- in such you know palette of Leo how are they is -- -- and it just sort of overview we can just keep on going down -- this this this this trend continues. Yeah I wouldn't be very happy time to be NASA managers in the period of deflation and ask myself and how wrong how long does this convergence going. There is no room knowing of that one. All right -- -- and -- thank you very much you can read edwards' piece by the way on the breaking news our website gets into some of the of oil and and commodities such well how the prices of changed over the past. Yeah is also Ahmed and had -- -- -- his breaking news if you are -- US showed 12:30 eastern 1730. BST. -- the trouble is righteous.

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Breakingviews: The tide of disinflation

Monday, October 06, 2014 - 03:47