Lead Us Not Into Inflation
After today, I will try to write the next five newsletters without mentioning the word “inflation.” It will be difficult but I’ll give it a try.
If you weren’t able to join my liveblogged conversation with Mohamed El-Erian, Bloomberg Opinion columnist and president of Queens’ College, Cambridge, you can find the transcript here. Given El-Erian’s past role as co-chief investment officer of Pacific Investment Management Co., his views on inflation and the bond market command a lot of attention, and I’d like to thank him again for taking part.
A Cliff’s Notes version of his outlook would be as follows. First, El-Erian thinks the Fed needs to find a way to exit its extremely loose monetary policy, and that it runs a risk by delaying a start to the process. As he put it:
New RSM Report Reveals Cybersecurity Threats Are Continuing to Grow in the Middle Market
Survey found that middle market organizations faced a record number of data breaches in 2020, in part due to the COVID-19 pandemic
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CHICAGO, April 20, 2021 /PRNewswire/ Middle market companies possess a significant amount of valuable data but continue to lack appropriate levels of protective controls and staffing, according to the RSM US Middle Market Business Index (MMBI) Cybersecurity Special Report released today from RSM US LLP (RSM), in partnership with the U.S. Chamber of Commerce. This year s results revealed that 28% of middle market leaders claimed that their company experienced a data breach in the last year, a sharp rise from 18% in last year s survey and the highest level since RSM began tracking data in 2015. Many leaders attributed this increase to challenges created by COVID-19.
DXY: Here’s why the US dollar index has crashed to a 5-week low.
This happened even after the strong US data.
The DXY declined because of the retreating bond yields.
The US dollar index (DXY) is down for the second straight day as US bond yields continued to decline. The index is trading at $91.13, which was the lowest level since March 4.
DXY price action
US dollar index relentless sell-off
The US dollar has been under pressure even after recent positive strong numbers from the United States. Early this month, data by Markit and the Institute of Supply Management (ISM) showed that the manufacturing and services sector continued to fire on all cylinders in March.
The Economy Is On The Cusp Of A Major Boom And Economists Believe It Could Last
The economy has entered a period of supercharged growth, and instead of fizzling, it could potentially remain stronger than it was during the pre-pandemic era into 2023.
Economists now expect the second quarter to grow at a pace of 10%, and growth for 2021 is expected to be north of 6.5%. In the past decade, there have been few quarters where gross domestic product grew at even 3%. Forecasts for 2021 and 2022 were revised higher after Congress approved $1.9 trillion in fiscal spending, on top of an earlier $900 billion package late last year.