Tag: inflation

  • Inflation Coming?

    | | Economics

    Want to play a “fun” game?  Simply go to Google and type “currency crisis (insert any country name)” and see your results.  Luckily for Americans, you will find that the United States is one of the few countries that seems to have avoided this designation so far.  As one of my Polish friends who immigrated asked me though, “Why do people think it can’t happen here?”  After all, as he was growing up, cigarettes went from $0.50 a pack on Monday to a dollar by Wednesday and two dollars by the weekend.  “Of course it can happen here.  It happens … Read more Inflation Coming?
  • When Inflation Moves Higher – What To Expect With The Stock-Bond Correlation

    | | Economics

    The single largest diversification play for investors over the last two decades has been the strong negative correlation between stock and bonds. There are portfolio managers and investment analysts who have spent their entire career under the negative stock-bond correlation advantage, yet times change. Finance’s greatest “free lunch” is not a one-sided bet. Older managers can impress young analysts even in their forties of old tales of “back in the day” when stocks and bonds moved together. Some may argue that elders who talk of this should be retired and just let the new guys run things, but investors should discuss and prepare for alternative equity/bond environments.  … Read more When Inflation Moves Higher – What To Expect With The Stock-Bond Correlation
  • How Much Inflation Beta Do You Want? Likely More Than What You Have

    | | Economics

    There is a correlation between commodity investing and inflation. Commodities do well late in the business cycle when bonds usually underperform and inflation is heightened. Research work by PIMCO measures the inflation beta for some major asset classes. Stocks have a negative inflation beta even though earning should rise with inflation. Bonds as a nominal asset show a strong negative beta. Real estate which should be a real asset is neutral to inflation. TIPS have a beta that is close to one which is consistent with the underlying construction of the security. Commodities have a very large inflation beta that can be used to take advantage of inflation concerns. Still, this high inflation beta may be a concern for some investors … Read more How Much Inflation Beta Do You Want? Likely More Than What You Have
  • Inflation is Here – Now Focus on the Next Question, Where is it Going

    | | Economics

    Inflation is here. There is no doubt, but that number will be around 2%. The only question that is unclear is whether there will be overshoot beyond the 2% level. Clearly inflation in the Eurozone is still not near 2%, but all inflation placed bets seem to surround the target level that have set by central banks. Investors have to ask the simple question of whether the beyond 2% is realistic … Read more Inflation is Here – Now Focus on the Next Question, Where is it Going