First, I summarize inflation comments made by Cathie Wood, Jack Dorsey, Janet Yellen, Jerome Powell and a few others.
Second, I provide some useful charts that indicate the current state of inflation with respect to goods and services, but also bonds.
Lastly, I give investors 3 dividend stocks and 2 growth stocks to consider, for the sake of matching and potentially beating high inflation.
This idea was discussed in more depth with members of my private investing community, Growth Stock Renegade. Learn More »
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Although I’m generally optimistic about investing I do possess something of a negative view of our current situation. It waxes and wanes over time, of course, but right now I’m more worried than usual. Of course, you might have guessed that I’m talking about inflation . I’d like to share my research and my thoughts on the challenge, and what we can do about it.
Here’s how this article plays out. First, I summarize inflation comments made by Cathie Wood, Jack Dorsey, Janet Yellen, Jerome Powell and a few others. Second, I provide some useful charts that indicate the current state of inflation with respect to goods and services, but also bonds. Lastly, I give investors 3 dividend stocks and 2 growth stocks to consider, for the sake of matching and potentially beating high inflation. What Cathie Wood Said
Let’s begin back in June 2021: … it does seem according to the University of Michigan that inflation expectations have picked up a bit when looking at a one-year time frame but looking at a five to ten year time frame and inflation expectations are are still in the two and a half maybe a little north of that… I’m highly confident that this is the inflation chart Cathie is referencing: The point is that Cathie believes the party line, that is, inflation is transient . We started hearing that a lot earlier this year. And, if you’re like me, the expectation was that “transient” meant that we’d experience higher inflation but that it would decline back down to 2-3% rather quickly. We’ll come back to this idea in a minute or two.
First, I want to explain why Cathie believes this narrative. Here’s one reason, from the ARK Invest Q3 2021 report : ARK still believes that the bond market is not corroborating the fears of inflation that have been dominating headlines. Meanwhile, monetary policy is likely to remain benign in its impact on equity markets, particularly if ARK’s outlook for an inventory correction and lower inflation is correct. Furthermore: In ARK’s view, inflation fears have been overblown and are likely to give way to the risks of deflation. Thanks to both the base effect of collapsing prices during the coronavirus crisis last year and to supply chain bottlenecks that could be causing businesses to double- and triple-order supplies this year, inventories have been building, perhaps not in stores or on dealer lots but in households and garages. In other words, Cathie believes that inflation is in fact transitory but that there’s actually a great risk of deflation . The deep cause is innovation, which drives down costs, and very often prices too. In other words, innovation causes deflation. She sees the inflation pendulum swinging back – too far. What Jack Dorsey And Elon Musk Said
You’ve likely already seen this but in case you missed it: Clearly, Jack believes we’re in the middle of hyperinflation. And, Elon also sees inflation right now, although in the longer term he’s not making any claims. Later, in response to a follower’s follow-up question, Dorsey added that ”[hyperinflation] will happen in the U.S. soon, and so the world.” What Janet Yellen And Jerome Powell Said
I don’t know if we’re in the midst of hyperinflation or not. And, I don’t know if inflation is transitory or not. But, I do know there are critically important pockets of inflation. I’ll show you that in just a short while. Before that, here’s what I do know our leadership is saying. For example : Treasury Secretary Janet Yellen said Sunday that she predicts inflation will persist until the “the middle to end of next year.” So, if we go back to when inflation really started to show up then we look forward to the middle of 2022, that means at least one full year of rather high inflation. One year isn’t too crazy, but at the same time, […]