Deflation in 2015, Four charts say YES.....

[David Krulac]

http://moneymorning.com/2015/01/21/deflation-in-2015-these-four-charts-say-yes/

[Chris Winterhalter]

@David Krulac 

I went to go see James Bullard (CEO/Pres of Fed Reserve Bank of St Louis) speak to the CFA institute in Chicago a few weeks ago.  It was very interesting to hear his outlook on the economy and how accurate the Fed has been with their predictions over the past 5 years.   He was rather happy that his team (St Louis) has been accurate about 33% of the time.  He even laughed that such a low percentage was a win on their end.  Across the board they missed inflation this past year.  Nobody thought it would be so close to 1% and most predicted 2-3%.  So a few hundred basis points in error is a big problem.  He thought that if they continue to fail at their inflation predictions that the Fed could lose credibility (some might already think that :)).  Overall a very interesting outlook on interest rates, inflation, & the labor markets.  

Could we see deflation this year?  Sure, my prediction would be close to the the 1% range of inflation (hopefully I will at least come in more accurate than the Fed).  But I'm no economist.  

Also James Bullard is a big proponent & advocate of QE, he thought it worked and thought it could be used again as our go to unconventional monetary policy tool.