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Is there a consensus on this forum regarding the US economy and
deflation?
Is our economy now deflationary vs. inflationary?
Furthermore, if the economy is now deflationary, doesn't that change the
relationship between stocks and bonds?
Here's why I ask: Compare the recent action in the daily chart of the
Dow Jones Industrial Average to the daily chart of the yield on the 30
yr treasury bond.
They look the same! They both clearly show a bearish head-and-shoulders
pattern that is close to breaking the neckline!
Isn't this relationship consistent with a deflationary economy rather
than an inflationary one? Anyone familiar with Gibson's paradox? "In a
deflationary enviroment stock prices move inversely to bond prices."
Are we there now?
Bill Bancroft
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