World Wars & US Inflation From 1914This is the US Inflation Rate (YoY) from 1914 until 2022.
Symbol is called USIRYY and it measures the Inflation Volatility in the United States.
With the War going on in Ukraine, and Russia trying to force its way through, I took the liberty of looking into the following:
- How Global Wars Affect Inflation
- How US Inflation Reacts to External Wars
- How Wars Affect the Financial Markets
You can see the time-lines, it's all laid-out in the chart (graph).
I took all the Major World Wars and events that significantly affected, not only the US Inflation, but Inflation itself.
First of all, the US Inflation Rate (USIRYY) tells me the following:
* When the US was involved in a War, we can notice that the US Inflation spiked.
* Most of the times when US was not involved in an External War, then Inflation dropped.
That's because of War & Uncertainty Sentiment around this "terrific" word.
War does not bring anything good, in fact, in only brings bad times.
People die and global sentiment gets super-negative.
This of course, leads to... you guessed it: Market Crash.
Why? Because after or during times of War, there are Recessions and Depressions.
Supply Chains are disrupted and the Global Economy falls on its face.
What about looking at things from a Technical Analysis perspective?
* Symmetrical Triangle: and the only way is UP!
I will give you points which I believe are worth keeping in mind for the next Market Crash.
First of all, let's be logical about this.
Winter is coming and it's only gonna get worse before it gets better.
As Inflation spiked to a 40y high, the higher powers intervened, in an attempt to cool the Inflation spike off.
I'm talking here about the Federal Reserve (FED) ramping up the Interest Rates.
This is the Effective Federal Funds Rate (FEDFUNDS).
Can you see the break-out?
They want to calm down Inflation, but they can't.
Why? Because this is no ordinary Inflationary period, it's a long-lasting thing.
One of those hyperinflation, deflation, stagflation, or whatever the heck these experts call it... :)
The Volatility Index (VIX) tells me that another spike in Fear Sentiment is inevitable.
I'm in love with Elliott Wave Analysis, so I labeled this next chart.
This is the United States Consumer Confidence Index (USCCI) and it measures exactly what its name says, LOL.
When it drops, people are freaking out. When it rises, people are optimistic and the Markets are going up. Daaaa!
With all that said, what's the bottom line here?
I believe that periods of terror are gonna hit us all.
Are we having World War 3? Who the heck knows?
All I know is that there are more pieces to this puzzle:
United States 10Y Bonds (USB10YUSD) have reached the Support, and a spike bigger than the Covid Pandemic has started:
The 10Y Treasury Note Yield (TNX) have broken out of a 40y down-trend:
Isn't it ironic how it synced with the Inflation 40y high?
Damn!
Germany 40 (DAX, GER30, GRXEUR) is doomed.
Fractal sequence, Descending Channel, and a "beautiful" ABC Elliott Wave Pattern.
So, how can you prosper from all this?
Metals could be a good hedge.
Gold (XAUUSD) just broke out of an important Bearish Structure.
Maybe it will go up.
Natural Gas (NG1!) & Crude Oil (USOIL) however, are showing Bearish Reversals.
Bitcoin (BTCUSD) is Bearish until further notice as well.
But this may become the new currency moving forward.
In times of terror, the banking systems might need to change.
Cash and Card is so '00.
WHAT'S YOUR TAKE? WAR OR PEACE?
Leave your commend down below.
Cheers!
Richard
