Meanwhile, Rousseff and Finance Minister Guido Mantega are sticking to their guns when it comes to their inflation shoot-out, arguing that excess global liquidity is a key, if not main culprit, rather than excess local demand.

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Whereas in the recent past, one currency may be reduced in value compared with other currencies, this time there is global competitive devaluation as excess liquidity is put into the system.

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In the other corner, global central banks are forcefully trying to counter these deflationary pressures by providing excess liquidity into the banking system via numerous forms of money printing.

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In summary, I believe that these recent price increases are more attributable to the excess liquidity in the financial system than a sudden positive shift in global economic fundamentals.

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Instead, we expect rates to remain elevated for many quarters, perhaps years, as the excess liquidity provided by the U.S. and Japan works its way out of the global economy.

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