- December US consumer price inflation is due. Most US prices are rising between 2% and 2.5% y/y, with headline CPI dragged down by a few items. In the coming months, headline CPI will probably rise over 2% y/y, with comparisons to the low oil prices of early last year. This is predictable and temporary.
- Central bank policy is not likely to create dramatically higher inflation. When looking at inflation, you cannot consider money supply without considering money demand—it is printing too much money that creates inflation. Money demand rose in 2020, justifying the rise in money supply. What is important is that central banks use their ability to moderate future money supply when future money demand moderates; otherwise, they risk a Bitcoin-style hyperinflation.
- The Fed’s Beige Book of anecdotal economic evidence is due. While always a fun read, this is important as we experience structural change. Economic data lacks the detail to signal why small business creation is booming, or how the pandemic changes global supply chains. The Beige Book might.
- ECB President Lagarde is going to speak. The chances of market moving insight are low. There is Eurozone November industrial production (too old to matter). US politicians will be doing politics (from which markets remain aloof).