Multimedia Weekly Digest: Inflation Nation

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By SA Multimedia :

Welcome to SA Multimedia Digest, where we combine videos and podcasts from across Seeking Alpha's contributor base into a single weekly article.

With the Fed making a handful of statements recently and the 'will they or won't they' debate around the Fed's hiking rates in December, we thought it pertinent to cover the topic of inflation.

We begin with former Treasury secretary Larry Summers who discussed this, among other fascinating topics, with David Beckworth .

...inflation is below target and is expected to remain below target for 10-20 years, even by markets, which are expecting the Fed not to raise rates very much at all. And so, in the face of that, I am not sure why you'd be confident that we need to raise rates in order to hit the inflation target. Second, I think that if you're serious about a symmetric target, you have to be prepared to exceed the target sometimes. If now, after nine years of recovery, with years more of recovery forecast and with an unemployment rate below 4.5%, if that's not the moment to exceed the 2% target, I don't know when that moment would ever come.

We continue with Russell Investments , who believe that whether or not the Fed hikes rates in December depends on how inflation numbers trend in the next 3 months.

The key takeaway for investors following the Fed's Sept. 20 meeting is that while the federal funds rate remains unchanged for now, comments from Chair Janet Yellen signaled the Fed is still likely gunning for a rate increase in December, Ristuben said.

CME Group also discussed what's keeping US inflation below the Fed's 2% target and whether significant government spending might help boost this.

And finally, Ben Hunt focused this week on how the inflation narrative is changing.

The Fed really turned the barge around in a major way to move towards tightening. They were talking about wage inflation coming down the pike and other significant developments that I want to talk about.There's a notable uptick in global economic activity...the first week of September we saw the ISM/Manufacturing survey of purchasing managers - kind of like the gold standard of what's happening in economic activity in the US - it's at a 5 year high.In the real economy these inflationary pressures have been growing for quite a while. But now there's a change in the narrative.I get these questions all the time - how can there be inflation? Look at the yield curve, look at how flat it is.And my response to that is, something like the yield curve, something that reflects market sentiment follows the narrative. What I'm saying is, I don't know what the truth of inflation is. No one knows what the truth of inflation is. Inflation has been measured in a very specific way to generate a very specific result for a very long time...So I don't know what the truth of inflation is but what I do know, or what I pay attention to is: what's the narrative around inflation?There is both a need and desire, both commercially and politically, to create this story of inflation. This is what the Fed wants; they want to declare victory - they desperately want to declare victory. It's what the White House wants more than anything in the world - they have to create this story - particularly of wage growth.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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