Where is inflation? Are we facing a temporary phenomenon, destined to run out by the end of the year or is the price virus already in circulation ready to hit the potential recovery? It is the question which, after weeks of dividing the opinions of the best minds in economic thought, has imposed itself with violent evidence on the US markets after the Fed, adapting to the choices of the US Treasury, has chosen not to intervene to curb the consequences of the rain of liquidity that is pouring into the pockets of Americans after the approval of the stimulus for 1.900 trillion dollars. The central bank actually takes it for granted a strong recovery of the economy: in 2021, according to the opinion of the majority of bankers who decide on the level of interest rates, the American GDP will rise by 6,5%, the likes of which has not happened since 1984. Other indicators are looking pretty stable, including unemployment which by the end of the The year will return to 4,5%, absorbing the failures caused by the pandemic to the system. There is no need to run for cover already, following the advice of unexpected critics, such as Lawrence Summers or Olivier Blanchard, who have warned against the risk that the sudden wealth of paper in the pockets of US citizens translates into a run of prices? THE Incoming signals from society are contradictory.
Of course, prices will go up, but it will be a temporary effect. Then the fragility of the labor market will make itself felt again, replies the staff of Janet Yellen, the "dove" who dictates the strategies of Joseph Biden, certainly sensitive to the imbalances in the labor market of his California highlighted this morning in the New York Times by the research of the Policy Lab, one of the nearby think tanks to the San Francisco Fed, which shows that about 80% of the state's unemployed are made up of people who come and go from precarious jobs, with contracts lasting a couple of weeks at most. A partially typical condition of California, where the percentage of workers in the cinema and entertainment world in general is high, but which has now passed the danger level. Over the past year, 47% of California's workforce has supported itself only thanks to public aid, a percentage that rises to 90% in the black population in open contrast to the well-being flaunted by the employees of the digital economy. And what can be, Janet Yellen wonders, the level of satisfaction of a worker who enters and exits the cycle every 15 days?
Of course, America is not just that. In Miami, waiters and cooks hired by restaurants are already 8% more than in 2019. According to Earnest Research, which monitors credit card trends, spending on gyms and beauty farms is at an all-time high, just as it is at the top bookings as of March 3 of stays at Airbnb or Home Away. Meanwhile, the production facilities pushed to the max they are putting logistics and transport structures in crisis. Not only is the auto industry lacking in chips, but also Nike vhe yesterday presented lower-than-expected quarterly data due to the absence of containers with which to carry shoes and clothing from China to the United States. In its third fiscal quarter, the company reported $10,4 billion in revenues, down 1% at constant exchange rates: the strong increases in sales in China and in the online channel were not enough, because in North America, there was a 10% drop for supply issues.
In this picture it is clear that the Fed's words could not be enough to reassure investors about the dynamics of inflation, especially in the medium term. The response of the market has thus made itself felt: operators have sold in recent weeks, as Biden's maneuver gradually took shape, the beauty of 80 billion T-bonds, pushing up the yields of long-term securities and, consequently, corporate bonds come close to 3%, a yield so attractive as to recommend leaving tech and focusing on bonds. And so on Thursday the thesis prevailed that the reopening of many economies will create an excess of demand compared to supply in several sectors (transport, tourism, leisure and non-basic consumption), causing an increase in prices.
But the Fed has the right cards to catch the pessimists off guard: already today it could announce the extension of the exemption of Treasuries from the calculation of capital ratios, a measure sufficient to block the sale of securities by banks and financial institutions. And this explains this morning's recovery. Inflation remains the sword of Damocles on the head of the Bull which, however, still seems to be in good health. As long as he gets the vaccine.
