The global economy is likely to enter stagflation

Looking at the CPI price, we habitually observe the highest proportion of pork weight, thus forming a "pig cycle."
Last year, the price of pork rose. Everyone thinks it is a recovery, and it will not affect the overall situation of deflation. Statistics from August last year showed that pork prices have recovered resurgence for three consecutive months. According to the monitoring data of the Ministry of Commerce, the average price of live pigs in 300 large-scale breeding enterprises nationwide was 1,529 yuan per kilogram, which was 249% higher than the lowest price in March of that year. From the analysis of the specific items affecting the price trend, pork prices rose by 167%, affecting CPI by about 0.48 percentage points.
This year it has started to rise again. March is the off-season of pork consumption, but this year it has risen against the trend. The average wholesale price of Baitiao pigs in Beijing Xinfadi Market on the 17th was 11.50 yuan per catty, which was more than 60% year-on-year. Everyone felt that they could not afford to eat meat, and actually reduced the sales volume. The current pork sales were only years ago. Half of it. The price of live pigs is also rising at the same time, and it is now the highest in the past four years.
The global economy is likely to enter stagflation.
In the industrial manufacturing industry, in the deflation cycle, the consumer industry believes that in the inflation cycle, it is more likely that traditional industrial products will deflate and the cost of living will rise.
China's PPI has been declining for 48 consecutive months. This year, oil prices and ferrous metals rebounded slightly, which narrowed the decline. The traditional manufacturing industry does not know how to marry this cold winter. It is now in a rebound cycle, and it is still unknown when it comes out of the bottom.
The yields of national government bonds have continued to decline, and even debts have appeared. For example, in Germany and Japan, the interest rates of Chinese companies and corporate bonds are also falling. It seems that investors are still helpless about deflation. However, things have already discovered subtle changes. The US inflation index TIPS (Treasury Inflation Protected Securities) has been in decline for 16 years, and the 5-year yield has been negative in the near future.
For the week ending March 18, the price of the 10-year Tips rose by 1.7%, and the yield fell to a one-year low of 0.26%. Break-even rates are often seen as a measure of expected inflation, the difference between the yields of ordinary government bonds and inflation-protected government bonds. The indicator has risen sharply this month and has risen even higher after the Fed meeting last Wednesday. The 10-year breakeven inflation rate rose to 1.62%, the highest level since December last year. The 5-year breakeven inflation rate rose to 1.52%, the highest level since last summer. The 2-year breakeven inflation rate rose to 1.64%, the highest level since July 2014. Although the inflation rate is at a low level, it is expected to rise.
In the first two months of China, prices have shown a clear upward trend. The PPI decline narrowed, and the PPI fell to -4.9% in February, but the CPI hit a new 19-month high of 2.3% in the month, with food prices rising significantly and the non-food price center slowly rising.
The CPI rose in February and was blamed on the Spring Festival and the cold wave. The prices of fresh vegetables and fresh foods increased year-on-year. In February, the price of fresh vegetables rose by 29.9% from the previous month, the highest monthly increase since March 2008, which affected the CPI by about 0.84 percentage points, more than half of the total increase of CPI. The prices of fresh fruit, pork and aquatic products increased by 6.9%, 6.3% and 6.0% respectively, and the total impact of the three factors increased by about 0.40 percentage points.
It seems that everyone usually eats and shrinks, and the Spring Festival hides at home and eats pork to resist cold. Now that March has arrived, pork prices continue to rise sharply, and housing prices and rents continue to rebound in some areas. According to the latest data from the China Real Estate Association, Beijing's average rent rose by 12.95% year-on-year, Zhengzhou rose by 1.77%, and even Harbin rose by 1.05%. What is going on? And commodities are also coming out of the bottom.
Xize think tank wrote that the recent Sino-US economy showed signs of stagflation. The US CPI was 1% in February, and the core CPI reached 2.3%, a record high in the past four years. The CPI in January reached 1.4%, while in September 15th, the CPI was still around 0. The PCE price index, which is the most important consumer spending of the Fed, also jumped sharply. The core PCE in January has reached 1.7%, close to the 2% policy target. No matter which price index has risen significantly. The United States is a gathering place for global commodities, and there is still a phenomenon of rising prices, indicating that the currencies of countries with loose currencies may find some release points in the price outside the virtual economy.
On the other hand, China cannot pass the cost to the whole world. The cost of economic restructuring is steel. Even if you put the cost of farmers to a minimum, once you enter the industrial chain of logistics, refrigeration, service, etc., you can’t make money. In the whole, the overall cost rises uncontrollably. The social resources wasted after the industrialization of aquaculture decreased, but in the past, the farmers’ farmer’s children’s pigs and pigs were not included in the cost, and they are now counted. The cost of service-oriented society will rise. It is impossible for you to eat Yantai Red Fuji, which is one and a half pounds.
Of course, industrial products are still in a surplus stage. From a fundamental point of view, no matter whether the stagflation belt is deflated, the days of traditional manufacturing will not change fundamentally.

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