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The following chart shows the natural log of annual change in the CPI less food and energy. When using logs, exponential growth (or in this case, decay) is seen as a straight line.Click to enlarge.No matter how hard the Fed tries, it cannot seem to break through the top of the decaying trend channel. So what's the latest tactic? Taper! Good luck on that. Maybe it works. Maybe it doesn't.As seen in the following chart,...

The Fed isn't quite sure what threshold it should be using to determine when to raise interest rates. Can't say I blame them. I therefore thought I'd offer some free (deflationary) advice.Furniture sales and new home sales go hand in hand. Right? So simply raise rates when furniture store sales (as a percentage of disposable personal income) reach "normal" levels again. What could be easier? Transparent. Clean. Consistent.Click...

The following chart shows the annual change in the 2-year moving average of retail sales (excluding food services). I'm going for a maximum smoothing approach to remove as much noise as possible (while still seeing the underlying trend).Click to enlarge.Good luck blaming the slow and steady growth rate decline (since 2012) on this winter's weather.In May of 2012, I predicted that the next recession would hit on or before...

The following chart shows industrial capacity per capita (industrial production index adjusted for capacity utilization and population).Click to enlarge.That's a 0.998 correlation over 27 years of data (Jan 1967 to Jan 1994). And then... Boom! Trend broken big time. That has to be one of the most impressive trend failures I've ever posted on this blog. It was so incredibly consistent and predictable right up until it...

Click to enlarge.The line in black shows real net corporate dividends.The line in blue shows the real trade deficit (same scale).The red line shows the exponential trend in real dividends from 1947:Q1 to 1987:Q1. Note the exponential trend failure (to the upside).Will real dividends stay permanently elevated? Will profit margins stay permanently elevated? Can we be assured that the worst is behind us? Can we expect...

The following scatter chart compares annual disposable personal income per capita growth (bottom scale) to the annual increase in the consumer price index (left scale).Click to enlarge.From 1960 to 2013:1. 2009 was the worst year for disposable personal income growth per capita. It was also the record low year for consumer price inflation.2. 2013 was the second worst year for disposable personal income growth per capita....

The following chart shows the annual change in beer, wine, and distilled alcoholic beverage wholesalers' sales.Click to enlarge.Don't let the trend line concern you. As seen in the next chart, I assure you that we are more than prepared to throw a legendary party!Click to enlarge.Just look at all that inventory accumulation. Yes, sir. Somebody must know something. The party's definitely coming!Saturday night - highSaturday...

I bought a 19-year TIPS last June. It was actually a bit less than 19 years. It will mature on April 15, 2032. That means it is now an 18-year TIPS. I locked in a 1.06% real yield with intent to hold to maturity.As of today:The 20-year TIPS yields 1.07%.The 10-year TIPS yields 0.53%.Using interpolation, those purchasing the 18-year TIPS now are now only getting 0.96% (1.07% x 0.8 + 0.53% x 0.2 = 0.96%).I therefore cannot...