forward japan

Analysts have argued (myself included) that future inflation will result from the government's massive economic stimulus policies.

We have just experienced the greatest financial crisis and credit deleveraging in a generation. Is it realistic to expect inflation in two, five, or even ten years from now? I've been pondering the possibility of Japan-style price action in the US.

Hussman and Gross have considered this (Hussman speaking japanese, Gross a buyer of treasuries).

(chart source: kshitij.com)

the jobless risk rally

New York City's unemployment rate is above 10%. Now this, the ratio of unemployed to job openings is exploding.

The government cannot end quantitative easing nor ZIRP any time soon.

Deflation first, then inflation?

VIX is still holding

Equities and credit continue to rally yet VIX remains range bound. The last time VIX traded in the 22 to 25 range, SPX was trading 1250 to 1300. The long bond has been rallying indicating renewed bets on deflation.