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Tuesday, November 30, 2021
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Expect Inflation for Years Ahead

#inflation #Fed

$SPY $SPX

“Inflation will remain elevated for 4 yrs or more Vs the hype of it being transitory” — Paul Ebeling

It was “fascinating so many deem inflation as transitory when stimulus, economic growth, asset/commodity/housing inflations (are) deemed permanent,” the BoA’s Top strategist Michael Hartnett said in a note Friday.

We see inflation in the 2%-4% range over the next 2-4 yrs.

US inflation has averaged 3% in the past 100 ys, 2% in the 2010s, and 1% in Y 2020 under President Trump (45), but it has been annualizing at 8% so far in Y 2021 under Mr. Biden.

Global stocks held a record highs hrs ahead of the reading of May core PCE (personal consumption expenditures index), an inflation gauge tracked closely by the Fed. The gauge is estimated to rise 3.4% Y-Y.

Fed Chairman Powell vowed on Tuesday not to raise interest rates too quickly based only on the fear of coming inflation. The comments were seen as a move to soothe investor nerves after a perceived hawkish monetary policy meeting last wk suggested officials believed interest rates would rise as soon as Y 2023, a yr earlier than anticipated.

Clients are heavily invested in equities, with cash allocations well below long-term averages at 11.2%.

In the wk to Wednesday, investors pumped $7-B into equities and $9.9-B into bond funds, while pulling 53.5-B from cash funds.

Within stockss, emerging market funds saw outflows of $1.6-M the most since September 2020.

As 1-H of Y 2021 draws to close higher inflation, hawkish central banks and weaker growth are the Key themes to focus on in 2-H.

Stocks finished up Friday, and the S&P 500 index closed out its best wk since February. Only last wk it had its worst week since February on concerns about inflation.

The S&P 500 index closed up 14.21 pts, or 0.3%, at 4,280.70.

Have a positive weekend, Keep the Faith!

Paul Ebeling
Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.   

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