Dow Jones Transport tends to predict inflation

2023년 10월 4일

The yellow line is inflation and the candles show the Dow Jones Transport index which represents the fortunes and costs of transportation companies. Transport is a major cost to getting products to market and so if DJT is going up it often then is reflected in the official inflation rate after a lag.

Right now DJT is in a downtrend since the middle of this year. Unless it bounces from here and starts to make higher highs the DJT as a predictor of inflation suggests that inflation is contained. As I showed in my RINF chart, this isn't what is anticipated by the market.

2023년 10월 4일

노트

Just to give my own opinion on the inflation range might be for the next 12 months:

If we see US unemployment rise and US tax receipts fall then we are likely to see inflation touch 0% before it bounces and oscillates in the 1% - 4.5% range.

If the US economy remains resilient then we may see inflation oscillate in the 2% - 6% range. Could US oil have a crisis that causes higher and longer inflation? Anything is possible but I don't think that's where we are headed. I think people are too enamored by the idea of hyper-inflation because it proves governments overspend. We'd need to see radical amounts of money supply get into the real economy to see rapid currency devaluation. It's a Bitcoiner's dream but there's decades left for the US dollar to remain stronger than the rest.