Evidence of a major risk for stocks

Obviously if demand falls off a cliff by 30% there wll be a concern that deflation eventually becomes the price trend.

If you look at the following charts there’s no doubt why Fed Chairman Powell declared recently a new Fed focus: to raise inflation.

Last month the headline CPI was 0.6% for June.

July’s numbers will be released on Wednesday.

Further signs of deflation can have an immediate and lasting impact on stock prices.

Inflation (CPI)

Money Velocity

Money & Credit

Lending Rates

Overall Debt to Growth

Price Instability

Deflation (and too much inflation) causes price instability and can drive stocks down.

By Terry Grennon

Asset Allocation Strategist