Most of you realize I’m now no longer keen on the media. It has 0 to do with who they’re as human beings and the whole thing to do with how they make their money. They want site visitors at their web sites if you want to promote ads. The quality manner to draw site visitors is to scream, “The Sky is Falling!” You see it in almost each headline on CNBC and there is a purpose for it. More oldsters will click. I’ve observed that maximum articles are not anything extra than reviews with little records to guide claims. Therefore, I simply make the selection to live farfar from it altogether. The number one purpose I love doing what I do is that I can use the StockCharts.com platform to demonstrate now no longer what the large Wall Street corporations are saying, however alternatively what they are buying (or selling). You absolutely can not cover what you are doing together along with your money. Supply and call for are sincerely depicted at the charts. THAT is wherein we discover the TRUTH. Perhaps the most important 2021 worry that the media has mechanically highlighted has been inflation. Let me first say that there may be no denying that we are seeing inflationary pressures. Have you been to the grocery keep lately? The fueloline station? Home Depot? Prices have risen and, in lots of cases, risen very rapidly. They preserve to rise. But I additionally accept as true with that we are in a duration of records that maximum of us (absolutely everyone beneathneath a hundred years old) have by no means witnessed before. The monetary imbalances first commenced in the course of the pandemic with a cratering in call for vs. an oversupply. That led to falling fees, that is precisely what we must have anticipated primarily based totally on Economics 101. Core client fee index numbers do not fall very often. After losing in consecutive months in past due 1982, we most effective noticed three extra month-to-month drops from 1983 thru the begin of the pandemic in 2020. Put every other manner, the center client fee index turned into flat or received floor 441 months out of 444. It could be very regular for fees to rise. Now examine the Core CPI chart ($$CCPI) the beyond few years.
The annual inflation price modifications for 2 reasons. The thirteenth month falls out of the calculation and the today’s month is delivered. I need you to appearance at “Point 1” and “Point 2” above. The March to May 2020 duration became hit the toughest in phrases of deflation as we noticed the Core CPI fall three consecutive months. That had now no longer took place withinside the earlier 60 years. It became now no longer because of financial conditions, however, it became because of government-mandated shutdowns and restrictions. Our economic system got here again in no time and really strongly. The problem, though, is that deliver chains fell manner at the back of due to the fact our factories had been close down, so deliver faded to tiers now no longer visible before. Again, it became Economics a hundred and one at work. Demand improved in no time. Supply does not simply seem out of nowhere. It takes time. People must be hired. Goods must be produced. This “catch-up duration” became taking place as call for extended rapidly. Of course, fees will upward thrust. That’s a given. Just as the “loss of call for” problem failed to closing in 2020, the “loss of deliver” problem may not closing in 2021/2022. But the truth is that call for outstripped deliver via way of means of a completely huge margin and it came about nearly precisely three hundred and sixty five days after the deflationary duration (Point 2). So our annual inflation price surged due to the fact (a) the calculation misplaced the three-consecutive deflationary months and delivered the three-consecutive excessive inflationary duration from April thru June 2021. I trust we’re going to start to see significant declines withinside the annual inflation price starting in April, May, and June 2022. Expect a large upward thrust in U.S. equities at some point of that duration. Growth shares will explode. So how will we recognize if inflation certainly is a problem? I assume it is easy. Here is the easy 2-step process: Ignore the media, due to the fact they’ve sincerely NO CLUE Follow the charts, due to the fact they DO NOT LIE There are three “pass to” charts for me to absolutely examine how Wall Street is deciphering the inflation data. These charts will assist us decide if the inflation danger is REAL or FAKE. Gold vs. S&P 500 Intermarket relationships display us rotation. As Wall Street anticipates primary modifications in overall performance ahead, they reposition themselves withinside the first-rate role feasible to climate the change. Inflation triggers worry. It reminds us of the Nineteen Seventies. Anyone making an investment in U.S. equities at some point of the inflationary Nineteen Seventies recollects the inventory marketplace challenges. Gold ($GOLD) prospers on worry and worry can are available in many shapes and sizes. So the truth that gold rises does not always suggest that inflation is a problem. However, REAL inflationary durations have mechanically despatched gold better on a relative basis. Temporary inflation troubles have now no longer.