If you look back on our posts over the last two years we have discussed why inflation might become a concern and related matters since 2020. It has happened, February CPI at 7.9% is the highest since 1982 and it may grow higher. What may turn out to be transitory is our commitment to lowering it after markets react. Or will the concern of higher prices force action. Things are going to get interesting. … [Read more...]
Let’s get real, even transitory “high inflation” can be painful
A couple of points that I believe should be emphasized in the discussion about transitory high inflation are that these price increases are likely permanent, and even transitory high inflation can materially affect a person’s standard of living. After the arbitrary time period called “transitory” when we have the arbitrary price increases called “high inflation”, prices will continue to rise at the slower “not high inflation” rate (disinflation) unless we get deflation. Deflation, when measured … [Read more...]
Many now believe significantly higher inflation is a risk….maybe because it’s here?
Highest y/y Core Inflation in 30 years
Largest Monthly Change in Core CPI in 40 Years
Updated M2 and Core CPI
M2 growth breaking records and 30 year high in monthly Core CPI increase (Bloomberg chart)
The inflation risk to a traditional 60/40 “balanced” portfolio is Real
A typical 60% equity/40% fixed strategy has done well in conjunction with stable or declining inflation. But what about even a mild increase in inflation? That has been quite different. Michael Ashton, Director of Research at Real Asset Strategies, has some key insights into why you might want to consider adding inflation related investments to your portfolio. Inflation Shocks, Inflation Vol Shocks, and 60-40 Returns Not surprisingly, there has been a lot of debate about the ultimate … [Read more...]
Gasoline and Headline Inflation
Headline deflation is likely headed our way in the short term but not necessarily just because of the recession. Headline CPI tracks gasoline pretty well. … [Read more...]
M2 Velocity at Record Lows
Could it go lower? Sure...and it better if M2 keeps skyrocketing. That is if we want to avoid much higher inflation. … [Read more...]