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Thread: Inflation

  1. #13

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    Only A Banking Crisis Or Higher Rates Can Stop Inflation Now: Trader

    If you study the history of inflation in the U.S., whenever CPI surpasses 5.0% outside of wartime, the only thing that prevents inflation from marching higher is a banking crisis (’92, ’08) or significantly higher interest rates, which occur with a considerable lag. Capital market participants today are of the consensual view that the Fed is hamstrung from raising their Target Rate significantly higher due to Treasury’s debt service and interest burden. We don’t buy that premise; if CPI inflation trends 10% or higher they will have to act with Volckerian resolution.
    https://www.zerohedge.com/news/2021-...ion-now-trader
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.

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  3. #14

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    This Inflation Defies the Old Models
    Neither supply or demand by itself is increasing prices; it’s an unusual combination of both

    Last April, economists thought inflation would be around 2.5% right now. Instead, it’s over 6%. Even by the forgiving standards of economic forecasting, that’s a miss of epic proportions.

    Explanations come in two schools. The demand school blames President Biden and the Federal Reserve for administering too much stimulus.

    The supply school blames pandemic-related bottlenecks and supply chains.
    https://www.wsj.com/articles/this-in...hare_permalink
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.

  4.  
  5. #15

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    Inflation Surge Pushes U.S. Real Interest Rates Into More Deeply Negative Territory

    By standing still, the Fed’s policy has provided more stimulus to the economy this year

    With inflation running at 5% in October from a year earlier, according to the Fed’s preferred gauge, real short-term rates are at their lowest levels in four decades and deeply negative.
    https://www.wsj.com/articles/inflati...hare_permalink
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.

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  7. #16

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    Key Fed inflation gauge rises 4.9% from a year ago, fastest gain since 1983

    The core personal consumption expenditures price index, a closely watched inflation gauge at the Federal Reserve, rose 4.9% from a year ago in December.

    That was the fastest gain since September 1983 and a touch above the Wall Street estimate.

    Employment costs increased 4% from a year ago, the fastest in the 20-year data history, though the quarterly rise of 1% was less than expected.
    https://www.cnbc.com/2022/01/28/key-...ince-1983.html
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.

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  9. #17

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    The pros all said throughout 2021 that they wouldn't worry about inflation until they saw wage inflation. That time is now here.

    Employers spent 4% more on wages and benefits last year as workers received larger pay raises in a tight labor market, rebounding economy and period of accelerating inflation, marking an increase not seen since 2001.
    https://www.wsj.com/articles/us-empl...n-11643331612?

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  11. #18

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    What are some good inflation hedges? Gold I'm pretty sure, but what else? Are international stocks or bonds any good in a high-inflation environment?


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  13. #19

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    Quote Originally Posted by bmneveu View Post
    What are some good inflation hedges?
    Stocks are probably the best. Overweight C. S fund should fare okay, but many of those smaller companies still rely on debt to keep the lights on. I fund probably okay to some extent but there's other factors including currency risk there.

    Any companies that have pricing power will be okay. Not advocating these individual stocks, but think NFLX, AMZN and how they've already raised prices. People won't be leaving either company because of the price hikes. Companies with high levels of debt will not be so good, but they've mostly been hammered in advance.

    REIT is a good option and may be available once TSP finally starts their modernization track.

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  15. #20

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    I'm not crazy about the inflation numbers but perspective is needed. Everyone has forgotten that gasoline prices hovered below $3 a gallon in most of the US in all of 2020 and part of 2021. YoY comparisons are going to be drastic and headlines like to be drastic. It's kind of like when CNBC says, "DOW DROPS 150 POINTS!!!", when the reality is 150 points sounds a lot worse than .2%.

    Once we get to June, those YoY comparisons won't sound so wild. In fact, there's a very good chance they will be lower with stimulus finally gone.

    The average U.S. household is spending an additional $276 a month because of inflation that is rising at its fastest rate in 40 years, a new economic analysis showed.

    The squeeze stems from higher prices across a range of products and services, including cars, gasoline, furniture and groceries.

    Mr. Sweet came up with the figure by comparing what the average household spent under 7.5% inflation versus the amount it would have spent when inflation was 2.1%, the average in 2018 and 2019.
    https://www.wsj.com/articles/higher-...h-11644489000?

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  17. #21

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    Will Inflation Stay High for Decades? One Influential Economist Says Yes

    Charles Goodhart sees an era of inexpensive labor giving way to years of worker shortages—and higher prices. Central bankers around the world are listening.

    When the global economy tanked in March 2020, the rate of inflation looked like it was heading to zero. That made it a surprising moment for former U.K. central banker Charles Goodhart to predict that inflation would hit between 5% and 10% in 2021—and stay high.
    https://www.wsj.com/articles/inflati...hare_permalink
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.

  18.  
  19. #22

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    We are now effectively completely out of the Boom Bubble.

    The youngest Boomers are 58 years old.

    There will be a labor shortage.


    Also note, many of those boomers (and, actually those of us younger than the boomers) did not have pensions. We invested in IRA/401(k)/etc.. If invested in equities for those 40+ years one has to ask: Why am I working in my best years. I have a huge nest egg. Or, at least a big enough nest egg. I have no requirement to sit at some dumb ass job after the age of 60. I definitely don't need to greet fellow chumps at the local Walmart. And, that restaurant job isn't offering a good, consistent salary - in fact, those chumps dumped my ass when I absolutely needed them. Yowser, I was a good, long term employee working for table scraps. I'm good with what I have. Peace Out Baby. Later Days. Adios Amigos!!!
    Lookin' up at the 'G Fund'!!!

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  21. #23

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    Fed Governor Waller says half-point rate hikes could be needed as ‘inflation is raging’

    Fed Governor Christopher Waller told CNBC that the central bank may need to enact one or more half-percentage-point rate hikes in the months ahead.
    “Inflation is raging,” he said, as he pushed for aggressive moves that include balance sheet reduction soon.
    https://www.cnbc.com/2022/03/18/fed-...inflation.html
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.

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  23. #24

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    Powell says ‘inflation is much too high’ and the Fed will take ‘necessary steps’ to address

    Fed Chairman Jerome Powell vowed tough action on inflation, which he said jeopardizes the recovery.

    Powell said the Fed will continue to hike rates until inflation comes under control, and could get even more aggressive than last week’s increase, which was the first in more than three years.

    He noted those rate hikes could go from the traditional 25 basis point moves to more aggressive 50 basis point increases if necessary.
    https://www.cnbc.com/2022/03/21/powe...o-address.html
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.

  24.  
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