ECRI USFIG at 70-Month High - Inflation Pressures Continue Higher

On Thursday, July 3, 2014, the Economic Cycle Research Institute (ECRI), a New York-based independent forecasting group, released its latest readings for its proprietary U.S. Future Inflation Gauge (USFIG) for June 2014.  The value of the USFIG lies in its ability to measure underlying inflationary pressures and thereby predict turning points in the U.S. inflation cycle.

In today's release, July 3, 2014, ECRI reported USFIG rose to 105.5 in June from the May reading of 105.0.

Click for full sized images

Lakshman Achuthan,ECRI's managing director, said "With the USFIG trending up and hitting a 70-month high in June, underlying inflation pressures have risen further."

ECRI’s Recommended Books:

• Beating the Business Cycle By Lakshman Achuthan, Anirvan Banerji
• Analyzing Modern Business Cycles: Essays Honoring Geoffrey H. Moore(Paperback) by Philip A. Klein (Editor)

ECRI's US FIG Indicates Building Inflation Pressure

On Friday June 6, 2014, the Economic Cycle Research Institute (ECRI), a New York-based independent forecasting group, released its latest readings for its proprietary U.S. Future Inflation Gauge (USFIG) for May 2014.  The value of the USFIG lies in its ability to measure underlying inflationary pressures and thereby predict turning points in the U.S. inflation cycle.

In the latest release, for the week ending May 16, 2014, USFIG rose ECRI’s USFIG rose a bit further in May to 105.2 from the March reading of 104.9.

Lakshman Achuthan,ECRI's managing director, said "With the USFIG reaching a 13-month high, underlying inflation pressures have begun to build."

ECRI’s Recommended Books:

• Beating the Business Cycle By Lakshman Achuthan, Anirvan Banerji
• Analyzing Modern Business Cycles: Essays Honoring Geoffrey H. Moore (Paperback) by Philip A. Klein (Editor)
  

ECRI Global Inflation Numbers Heating Up - Fed Behind the Curve

The Economic Cycle Research Institute, ECRI - a New York-based independent forecasting group, released its latest readings for its proprietary monthly Future Inflation Gauges this morning. (More about ECRI)

Five of the seven regions covered show increasing inflationary pressure with Japan and Australia going against the global trend.

Commenting on the US report, Lakshman Achuthan, co-founder and Chief Operations Officer of ECRI, said, "With the USFIG rising to a 29-month high, underlying inflation pressures remain in a cyclical upswing."

See my exclusive article at Seeking Alpha for a full summary of today's data:

• Global Inflation Pressure Rising: How to Profit

Here is a video interview on CNBC where Lakshman says the Fed has been behind the curve for a decade on inflation.

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Then read my artilce "How to Play Expected Inflation From the TIPS Spread."  The 30-year individual TIPS I recommended in that article for purchase last month on Feb. 17, 2011 are up nearly 5% already.


Also note the IMM says high food prices may be here to stay. 
Record Food Prices May Persist as Economic Growth Boosts Demand, IMF Says

"Elevated food prices could be part of the new reality, says the IMF, as it will take years for farmers to expand production enough to meet increased demand and drive down prices. "The main reasons for rising demand for food reflect structural changes in the global economy that will not be reversed," including higher demand for meat in developing countries, and increased demand for biofuels is contributing to a tightened supply."

I'm not predicting run-a-way inflation, but the Federal Reserve's preferred inflation indicator, the PCE index, went up 0.3% the last two months.  If it continues at that rate for 10 more months, annual inflation will be

• 0.3% / Month x 12 months = 3.6% per year!

My individual TIPS paying inflation plus 2.1% will then have an effective yield of 5.7% which is pretty good if you expect the Fed to keep rates low for awhile.

Long Term Results that Speak for Themselves

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 239% (a triple plus another 12%!!)vs. the S&P500 UP only 32% vs. NASDAQ UP only 27% (All through 3/4/11)   

For 2011 , "Kirk's Newsletter Explore Portfolio" is up 8.6% YTD as of 3/4/11

(Currently my explore portfolio has about 66% in equities and 34% in fixed income so the stocks are doing very, very well.)

In 2010, "Kirk's Newsletter Explore Portfolio" gained 20.4% vs. the DJIA up 11.0%
In 2009, "Kirk's Newsletter Explore Portfolio" gained 33.5% vs. the DJIA up 18.8%

• Subscribe NOW and get the March 2011 Issue for FREE! !   
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KEY ECRI Articles:

• Nov 30, 2010 "ECRI Calls for Revival of US Economic Growth"
• Oct 28, 2010 "The much-feared double-dip recession is not going to happen"
• Oct. 28, 2010 ECRI Warns of High Inflation Nightmare From QE2
• Sept. 24, 2010 ECRI - Premature to Predict New Recession
• July 01, 2010 ECRI Weekly Leading Indicators Widely Misunderstood
• Dec. 04, 2009: ECRI Warns of Lasting High Unemployment Despite Economic Recovery
• July 31, 2009: ECRI Predicts End of Home Price Downturn
• July 21, 2009:  ECRI Predicts The End of the Recession is Imminent
• April 3, 2009: ECRI Says US Business Cycle Recovery Ahead
• March 28, 2008: ECRI Calls it "A Recession of Choice"

Lakshman Achuthan - Beating the Business Cycle

“This easy-to-read book tells you how the respected ECRI calls turning points, and how you can, too.”
—Jane Bryant Quinn, Newsweek columnist

" The Economic Cycle Research Institute can justify a certain smugness now that business cycles are back in fashion."
--Harvard Business Review

“Shows... how far the state of the art in cycle forecasting has advanced, and how investors can profit from it.”
—Jon Markman, award-winning CNBC/MSN financial columnist 

Inflation Pressure Plummets: ECRI's FIG at 47-Year Low

The Economic Cycle Research Institute, a New York-based independent forecasting group known as ECRI, said inflation pressure is at a 47-year low. (More about ECRI)

ECRI's US Future Inflation Gauge (US-FIG), an index designed to anticipate cyclical turning points in inflation, plunged to a 47-year low.

The USFIG dropped to 88.5 (1992=100) in November from 92.7 in October, while its smoothed annualized growth rate dived to -35.3% from -31.8%. The gauge was pulled down in November by disinflationary moves in all available components.

"With the USFIG nose-diving to its lowest reading since 1961, U.S. inflation pressures have collapsed" said Lakshman Achuthan, managing director at ECRI.

Click to view full size chart courtesy of ECRI

The very low US-FIG means means the Federal Reserve can keep the Fed Funds rate low or cut it more since inflation pressures are still in a cyclical decline.

Oil Prices Per Barrel courtesy of Stockcharts.com

With gasoline selling for under $2.00 per gallon, even in Taxifornia, this should act as a stimulus package to help consumers.

The US Fig is at a 47-year low. Curious enough, my father bought his first home to raise our family in 1960 about 48-years ago, using a 4.00% CAL-VET loan. (He served in the US Navy during the Korean War.) Now there is talk the Fed will buy home loans to target a 4.5%, 30-year fixed mortgage rate. The low interest rates of the 1960s were followed by the high inflation of the 1970s and 1980s. Will history repeat itself?

More Information:

• More about ECRI US-FIG Growth Rate
  
  
• US Treasury Rates at a Glance
  
  
• World Stock Markets at a Glance
  
  
• Libor Rates at a Glance
  
  

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Term	Date	Highest Rate (APY)	Where? (Click link for Full Rate Sheets)
Daily Savings	12/04/08	2.60%	Vanguard Prime Money Market Fund
Tax Exempt	12/04/08	1.13%	Vanguard Tax Exempt Money Market Fund
Online Savings	12/04/08	3.25%	High Performance Money Fund @ Wachovia Bank
3-Month Treasury	12/04/08	0.01%	US Treasury Rates at a glance
6 Months	12/04/08	4.32%	State Bank of India & 3.76% at Ascencia Bank
6-Month Treasury	12/04/08	0.29%	US Treasury Rates at a glance
7 Months	12/04/08	2.60%	Wachovia Bank
1 Year	12/04/08	4.68%	State Bank of India & 4.10 @ Umbrella Bank
1 Year Treasury	12/04/08	0.64%	US Treasury Rates at a glance
18 Months		4.40%	UmbrellaBank & 4.30% @ Capital One
2 Years		4.51%	1st Source Bank & 4.45% @ GMAC Bank
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3 Years		4.80%	1st Source Bank & 4.75% @ Intervest National Bank
3-Yr Treasury	12/04/08	1.09%	US Treasury Rates at a glance
4 Years		5.05%	Intervest National Bank & 4.96% @ Capital One
5 Years		5.25%	Intervest National Bank & 5.20% @ Capital One
5 Yr Treasury	12/04/08	1.61%	US Treasury Rates at a glance
7 Years		5.50%	Capital One & 5.00% @ PenFed CU
10 Yr Treasury	12/04/08	2.63%	US Treasury Rates at a glance
7 Years	12/04/08	5.31%	Intervest National Bank
30 Yr Treasury	12/04/08	3.13%	US Treasury Rates at a glance