Inflation & The Balloon Ride
Sophia and I went on a fabulous adventure one day earlier this month – hot air ballooning. We got up at 3am and drove out to the Deer Valley Airport to begin our adventure and, after being driven into the desert, I stood in awe as I watched them inflate our balloon. It took a few minutes so I began thinking about money, of course (better than thinking about falling back to earth if it didn’t go so well). Inflation is our topic this week.
Up, up and away,
Susan R. Linkous
Here we go . . . INFLATION –
“Despite having narrowly escaped the jaws of deflation, large federal deficits, elevated commodity prices, extremely accommodative monetary policy and heavy media attention have begun to stoke fears of inlfation.” ~J.P. Morgan / Market Insights
Recent rises in energy, food and commodity prices may actually put pressure on inflation as they do more to curb discretionary spending since more of the average American’s monthly budget gets redirected to these necessities.
Wage increases would certainly bring about inflation but, with unemployment high, we aren’t seeing much in the way of wage inflation.
We have some inflation. It’s low.
Investors could choose to do the following:
1) Be aware of current inflation picture but don’t let it be the main driver behind your investment decisions.
2) Listen to hyperinflation threats with caution.
3) Understand that higher energy costs will not cause broader inflation.
4) “Though not a guarantee for the future, historical evidence suggests that stocks and commodities may fare well in a low but rising inflation environment.” ~J.P. Morgan / Market Insights 2Q 2011.
Have a great week and don’t forget to look up!
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