Inflation Reaction - Reasons to be optimistic.
- Gordon Bonker
- Jul 13, 2022
- 2 min read
It's been impossible not to notice inflation this year.
June's CPI print came out this morning at 9.1 %, the highest on record in my lifetime. (Since 1981)
If you are worried about lasting high prices - here are 3 reasons to maintain optimism for the future:
๐ญ.) ๐ ๐๐ฐ๐ต ๐ผ๐ณ ๐๐ต๐ฒ ๐๐ผ๐ฟ๐๐ ๐ถ๐ป๐ณ๐น๐ฎ๐๐ถ๐ผ๐ป "๐๐ต๐ผ๐ฐ๐ธ" ๐ถ๐ ๐ฏ๐ฒ๐ต๐ถ๐ป๐ฑ ๐๐.
The U.S. stock market has pulled back ~20% and entered a bear market on the fears of inflation and economic growth.
The stock market is a ๐ญ๐ฆ๐ข๐ฅ๐ช๐ฏ๐จ indicator of the economy, and much of the selling the last 6 months has been due to the fear of the current inflationary environment and slowing economic growth.
I am in the camp that the worst of the selling in the stock market is behind us- time will tell if I am correct.
๐ฎ.) ๐๐ผ๐ฟ๐ฒ ๐ถ๐ป๐ณ๐น๐ฎ๐๐ถ๐ผ๐ป ๐ฐ๐ฎ๐บ๐ฒ ๐ถ๐ป ๐ฎ๐ 5.9%, ๐๐ต๐ผ๐๐ถ๐ป๐ด ๐๐ถ๐ด๐ป๐ ๐ผ๐ณ ๐ผ๐ฝ๐๐ถ๐บ๐ถ๐๐บ.
Inflation is broken into 2 parts- Headline & Core Inflation.
Headline inflation is primarily used in comparing purchasing power year over year, however it includes food & energy prices.
Core inflation ๐ฐ๐ฎ๐ช๐ต๐ด food and energy prices, which are highly volatile in price.
Core inflation is the preferred metric in predicting ๐ง๐ถ๐ต๐ถ๐ณ๐ฆ inflation rates.
This number coming down is a good sign.
๐ฏ.) ๐๐๐ฒ๐ฟ๐ ๐ถ๐ป๐ณ๐น๐ฎ๐๐ถ๐ผ๐ป๐ฎ๐ฟ๐ ๐ฝ๐ฒ๐ฟ๐ถ๐ผ๐ฑ ๐ถ๐ป ๐ต๐ถ๐๐๐ผ๐ฟ๐ ๐ฒ๐๐ฒ๐ป๐๐๐ฎ๐น๐น๐ ๐ฒ๐ป๐ฑ๐. (๐๐๐ฒ๐ฟ๐ ๐๐๐ผ๐ฟ๐บ ๐ฟ๐๐ป๐ ๐ผ๐๐ ๐ผ๐ณ ๐ฟ๐ฎ๐ถ๐ป)
It is very hard to predict the future.
The greatest economists, investors, and writers alike have never been able to fully pin a market bottom or price top perfectly.
The only constant in all of our historical inflationary data is that it does eventually stabilize.
I can't guarantee if it's next month, next quarter, or next year-
But I can guarantee you that this too shall pass.
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Avery credible and encouraging update!
A very credible and encouraging reminder ๐