Nailed It
The news cycle is often the last to the party. This is a conversation we have often with investors. Think about how the world looks in 24 months, not today. By the time The coming food catastrophe is on the cover of The Economist, wheat prices may have already peaked. Thanks to Mark Ungewitter for the funny chart.
There have been signs in recent weeks that inflation may be cooling. Wheat, natural gas, and several other commodities have been rolling over fairly hard. Oil has not, remaining stubbornly high.
Used car prices continue coming down.*
Framing lumber is down 50% YOY, although still elevated from pre-pandemic levels.
Government bond yields have backed off, a relief in what has been a tough twelve months to own bonds.
What made the 1970's so brutal wasn't inflation itself - it was how long it lasted for. And while this risk remains (and everything above is a complete head fake) there are encouraging developments at play after a relentless stretch of rising prices. My hope is we're able to look back on this stretch as more of a post WWII scenario (high inflation that runs off fairly quickly.)
Just don't tie your portfolio to what's being reported on the front page of your local newspaper. It's probably already been priced in. Have a great weekend!
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The information contained herein should not be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. You should contact your investment representative (or advisor), attorney, accountant or tax advisor, with regard to your individual situation prior to implementing an investment strategy.
* The monthly Manheim Used Vehicle Value Index is independent of underlying shifts in the characteristics of vehicles being sold. It is increasingly recognized by both financial and economic analysts as the premier indicator of pricing trends in the used vehicle market but should not be considered indicative or predictive of any individual remarketer’s results. The Index is adjusted for mix of vehicle classes, mileage, and seasonality. The index is subject to revisions.
