zerohedge.com / by Tyler Durden / Nov 13, 2016 6:19 PM
Last Sunday, when a Trump victory still seemed improbable, One River Asset Management CIO, Eric Peters issued a note that in retrospect, was surprisingly prophetic: in it he predicted that after years of failure to kindle economic animal spirits, the “magic formula” to boost inflation involved a victory by none other than Donald Trump. To wit:
With central bankers desperate to boost inflation both in their country, and around the globe, yet failing to do so for years (especially as measured by the long end of the yield curve) leading to serious economists and pundits going so far as proposing the pinnacle of monetary lunacy, such as helicopter money, one person may have stumbled upon the “magic formula” for how to create inflation in the new normal: ‘A populist uprising, compromised free trade, immigration restrictions, a 15% currency devaluation, 0.50% interest rates combined with aggressive QE is today’s magic formula for modestly exceeding a 2% inflation target 2yrs hence.”
In other words, all that is needed for inflation expectations to spike, is a victory by the Donald Trump “populist uprising.” Sure enough, hours after the presidential election result, inflation expectations soared, bond sold off, and stocks surged on expectations that Trump would… unleash inflation.