Liz Ann Sonders: Investment Outlook (March 3, 2014)

bee

Key Points

- Inflation was revised higher in the latest GDP revision; while an increase in the minimum wage could push it higher still.

- But we remain sanguine about inflation risk as long as velocity and wage growth remain low.

- The key to watch near-term is bank lending, which is starting to accelerate sharply; signaling the possible return of “animal spirits.”

advisoranalyst.com/glablog/2014/03/05/liz-ann-sonders-investment-outlook-march-3-2014.html

Inflation:

Another way to understand velocity is to look at the spread between bank deposits and bank lending. Since 2008, a gap of $2.5 trillion has opened between bank deposits of nearly $10 trillion and bank lending of less than $7.5 trillion. This spread is unprecedented in history. The weakness in bank lending helps to explain the anemic nature of the recovery so far; but it also helps explain the low level of inflation we’ve seen. Recently bank lending is on a significant upswing and something to pay attention to with regards to inflation.

Record Gap Between Bank Deposits and Lending:

PRESSmUP

Thanks Bee...I've been a fan of Ms. Sonders for some time, dating back to her appearances on Wall Street Week (aka the good old days). I appreciate her style of communicating to the public, and I seldom have noted an area where I hold a completely divergent view. Schwab did well in bringing her on board.

Old_Skeet

Liz Ann Sonders and Jeffry Saut are the two investment strategist that I follow the most.

Hers for more of a long term perspective and Mr. Saut’s for more of a near term perspective.

I have linked Mr. Saut’s latest commentary below for those that might be interested.

http://www.raymondjames.com/inv_strat.htm