I have become a news junky and it almost comes in faster than a reasonable person can digest and make sense.
I was amused over the weekend to hear Twitter CEO Jack Dorsey forecast that we don’t need to bother with stagflation as hyperinflation is coming.
I don’t know where Dorsey got his doctorate in economics, but he is entitled to his opinion.
I would not go as far as Dorsey, but it is harder to buy the Fed’s prediction that any current inflation is transitory.
It seems the supply chain problems will push up prices and the energy market is not helping. I say this as it becomes apparent that the Federal Reserve will raise interest rates much sooner than was projected a couple of months ago.
You can see that the market believes that, as the 10-year Treasury moved up in yield recently. I also find talk of becoming carbon neutral is falling on deaf ears in China.
Trade barriers and the pandemic did impact the GDP for China, though much higher than the U.S.
But predictions of energy shortfalls in China could really damage Europe’s economy.
Speaking of Europe, higher gas prices are a function of China buying most of the supply of LNG and coal, leaving Europe in a lurch and sending energy prices upward.
West Texas Intermediate has increased each week for the last several weeks.
I’m sure you noticed the cost of filling your car. I would add that going to the grocery store is getting more expensive.
Maybe this will be the answer to our nation’s obesity problem as we will cut back due to the rise in prices. I doubt it, but looking for a silver lining.
There is really no silver lining with inflation. What you hope is that Dorsey is wrong and that the rise in interest rates will curb the demand.
We have demand far exceeding supply and the chinks in the supply chain are not helping anything.
There are positive projections for the various indexes and averages to move up. I cannot go there, as buying at record highs gives me indigestion.
I say that the great thing about the market is there are always value stocks, no matter how strong the stock market.
A perfect example is old Ma Bell, otherwise known as AT&T.
It trades at $25 and pays a dividend of over 3%.
This is no play in FANG stocks, but a beaten down stock that has shed its interest in streaming and will concentrate on cellular service.
All that said, nothing will protect you from a correction in the market except patience.
It is hard to have patience when your cash now costs you money as inflation eats into your savings every month - not to mention how much more everything costs.
Just the kind of scary thoughts prior to Halloween.
