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Inflation Risk for Bags: What to Buy and Sell Then?



The danger of inflation is undoubtedly the one most feared by stock market operators, especially in the United States.

Not as such, since we are still talking (see table below) about the percentage changes contained, as well as the effects on monetary policy.

In fact, how will the Fed still lower rates in the presence of inflation recovery?

Given that the US economy is still absolutely brilliant, a central bank in normal conditions, without much pressure (real Trump?), He could even consider raising rates.

And, even if it created a drop in the stock market, no problem, then it would be enough to reduce the first price drop.

Table with major US macroeconomic data

Today, various price indices have been published in different countries, but with the exception of India, the only real danger of inflation has been manifested in the United States.

IPC (Annual) India (October)4.62%4.25%3.99%
Main Consumer Price Index (Monthly) (October)0.2%0.2%0.1%
Main Consumer Price Index (Annual) (October)2.3%2.4%2.4%
IPC (Annual) (October)1.8%1.7%1.7%
IPC (Monthly) (October)0.4%0.3%0.1%

Already + 4.62% vs. + 4.25% expected from India was an introduction …

Inevitable: economically sound countries sooner or later in terms of inflation wages.

American data are a little vague.
Food and energy purification data are practically stable.

However, looking at the most significant and broader CPI (consumer prices) it is clear that inflation is raising its head, putting capital investments at risk.

This does not mean we must rush to sell US stocks.

However, of course, more than an annual figure is the monthly figure that makes you think.

+ 0.4% in October already exceeds expectations of + 0.3%, but above all compared to the previous month (+ 0.1%) for alarm activation.

At + 0.4% monthly, the danger of inflation becomes tangible and specific.

FED how to ask yourself now?

The alarm bell is unlikely to move the Fed to surprising moves.

Also, because on an annual basis, thresholds considered harmful to the economy are not exceeded (2%).

What is certain is that the Fed will have to conduct a thorough economic analysis to avoid the risk of being "first person" responsible for a real recovery in inflation.

Rising prices, which, while causing the risk of stock market inflation with likely bearish effects, could extend its negative effects on the real US economy.

In a nutshell, Powell would hit the central bank's main goals: controlling inflation and supporting the economy.


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