What the Fed’s Inflation Mania Means For Investors
Interest-Rates / Inflation May 09, 2014 - 05:03 PM GMTBy: Graham_Summers
The signs of inflation continue to appear in the economy.
The Fed is ignoring this because the Fed is afraid of deflation… despite food prices, energy prices, healthcare costs, home prices and stocks soaring.
• FedEx is increasing prices by 42% for some shipments.
• Commonwealth Edison is raising electricity rates by 38% in June.
• Chipotle is raising prices for the first time in three years.
• Netflix is raising prices on new customers.
• Colgate-Palmolive is raising prices.
These are simply explicit price increases. Many companies have been raising prices via a “stealth” price hike by simply charging the same price for less of a product. The latest example of this is bacon, but companies such as Kellogg’s, Snickers, Tropicana, Bounty, Heinz, and others have been using this tactic for some time.
Against this backdrop, the Fed is openly stating that it wants to create inflation. Put another way, the Fed is not only oblivious to the fact inflation is already appearing in the broader economy, the Fed actually wants to create more inflation!
Small wonder the US Dollar is teasing with breaking multi-year support.
In its quest to fight the brief deflation of 2008-2009, the Fed has unleashed a wave of inflation. These developments take time to unfold. But the signs are already there. The grand theme for 2014 will see prices moving higher.
The problem with inflation is that it is a lot easier to create than contain. The Fed continues with its dubious claims that inflation is too low, but the markets and prices are saying otherwise.
Buckle up, much higher prices are coming. The Fed is behind the curve again, just as it was in 2007. We all know what happened next.
To take action to prepare for what’s coming… and start taking steps to insure that when inflation rips through the system you don’t lose your shirt.
Graham Summers
Chief Market Strategist
Good Investing!
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Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.
Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.
© 2014 Copyright Graham Summers - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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