Deflation Economics: The Art of Twisting Data

Deflation economics

Deflation economics: Data manipulation at its best.

The Bank of Japan has long tried and failed to hit its target of 2% annual inflation, but the coronavirus means the topic has faded from conversation in a sign a permanent shift in priorities is possibly underway.

The price target has been put on the back shelf,” said economist Izuru Kato, president of Totan Research Co. “The target will probably become an even longer-term goal after the pandemic is over, which means policy is likely to be less focused on it.”

Recent, subtle shifts in the BOJ’s public communications suggest any new measures adopted at its April 27-28 meeting will likely focus on stabilizing financial markets and getting credit to companies, rather than more measures meant to spur prices.

risk of deflation

This is the situation much of the world is going to find itself despite all the claims the experts have been making about inflation raising its ugly head. We have been stating for quite some time now, that inflation is not an issue and the deflation argument that appeared insane yesterday will start to gain traction in the near future. Market Update May 2, 2020

China’s factory gate prices fell the most in five months in March, with deflation deepening and set to worsen in coming months as the economic damage wrought by the coroanvirus outbreak at home and worldwide shuts down many countries.

Friday’s data from the National Bureau of Statistics suggested a durable recovery was some way off, with China’s producer price index (PPI) falling 1.5% from a year earlier, the biggest decline since October last year. It compared with a median forecast of a 1.1% fall tipped by a Reuters poll of analysts and a 0.4% drop in February.

Deflation economics: Supposedly inflation is not an issue

Inflation is not going to be a real issue; by real issue, we refer to the manipulated data the government has been putting out. Anyone with common sense can see that inflation is real when you look at housing, education, health care, groceries, etc; the cost of all these items has soared over the years. However, we are not concerned with what smart individuals can see; we focus on what the masses see and digest, for it’s the masses misperception of a given situation that leads to the next opportunity. Case in point, the masses thought the markets would crash on a Trump win, so we issued a buy signal in the event Trump won, for we did not know whether he would win or not. However, one will see the full force of inflation in the stock market as we expect the market to surge to levels never seen before.

What we did know was that if he won, it would create a great buying opportunity, due to the shock effect. We used the same playbook for the coronavirus pandemic; this manufactured crisis has created an even greater buying opportunity. We are dangerously close to a “MOB” (mother of all buy) signals. Whatever outcome the masses latch onto, one thing is certain. The opposite will most likely come to pass.

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