Tuesday, April 15, 2014

Analyst Eyeballs Inflation Risk

Significant inflation could be just around the corner,causing the Federal Reserve to exit its bond buying support of the stock market in short order,according to Peter Boockvar,chief market analyst at the Lindsey Group.I think it's a big deal,Mr.Boockvar told CNBC.We've had multiple data points pointing to a bottoming in inflation.Gasoline prices are at their highest level since July.
If there's one thing that could handcuff Fed policy,it's a rise in inflation.According to the Fed's measure,we're far away from it.I think it's important in gauging the timing of the exit strategy.A faster uptick in inflation could hasten that exit strategy faster than the Fed thinks.You get back to that 2% level faster than the Fed thinks and you're going to see rate hikes faster than the Fed expected,Mr.Boockvar pointed out.
The Thomson Reuters/Jefferies CRB Index of 19 commodities,a widely recognised benchmark for commmodities trading,is at its highest point since October 2012.A closely watched measure of inflation,the Consumer Price Index,will be released later today.
On Monday,the markets shrugged off Ukraine worries on strong retail sales and Citigroup earnings.
Citigroup(C)

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