What the "Sudden, Dramatic" Surge in Googling "Inflation" Tells You
It likely "typifies the end of an old economic trend and the beginning of a new one"
by Bob Stokes
Updated: March 09, 2021
In the news, you hear that the big monetary fear these days is the prospect for a jump in inflation.
Here are some headlines since the start of the year:
- Inflation Is Coming. That Might Even Be a Problem. (Bloomberg, Jan. 13)
- Inflation concerns put Biden, Fed on defensive (TheHill.com, Feb. 23)
- Stocks tumble as Powell signals inflation is ahead (CNN Business, March 5)
However, keep in mind that similar inflation worries were pervasive a decade ago, when the U.S. Federal Reserve Bank was implementing its quantitative easing programs (QE1, QE2 -- these terms probably ring a bell) and just about every year since. Even so, runaway inflation never took hold. Why?
Here's a perspective you won't find anywhere else, from our just-published March Global Market Perspective:
The number of articles containing the word deflation has been stuck at zero for three out of the past five months, while inflation stories have steadily increased. This kind of contrary sentiment precisely typifies the end of an old economic trend and the beginning of a new one. In fact, the financial media's preoccupation with rising prices is nearly identical to that of January 2012, when GMP definitively stated: "The inflation panic is out of whack with prices." Back then, a similar inflation scare had taken hold, as the ... CRB index of core commodity prices completed a two-thirds retracement of its sell-off from June 2008 to February 2009.
And, during most of 2020 going into 2021, commodity prices have also risen.
As a March 2 NBC News headline says:
The price of food and gas is creeping higher -- and will stay that way for a while
Financial history shows that a rise in stock market prices is generally followed by an expanding economy. So, the current uptick in inflation is not surprising. Of course, that certainly doesn't mean that this uptick will last indefinitely.
Indeed, the chart pattern of the CRB Index of core commodity prices (which our March Global Market Perspective analyzes and explains) shows why a trip to the grocery store or filling up your vehicle's gas tank may get cheaper sooner than many observers expect.
Get the insights you need inside our just-published March Global Market Perspective so you can prepare for what relatively few expect.
50+ Pages, Packed with High-Confidence Global Investment Opportunities (and Warnings)
That's a reference to EWI's Global Market Perspective.
Every month, EWI's team of global market experts deliver their analysis and forecasts for 50+ markets worldwide (U.S. included) -- all in one convenient publication.
Global Market Perspective offers serious reading for the serious investor (GMP was once exclusively available to institutional subscribers).
The new March Global Market Perspective is now online.
Get the timely insights you need as many global markets face historically crucial junctures.
Global Market Perspective
Gives you clear and actionable analysis and forecasts for the world’s major financial markets.
Get insights for the U.S., European and Asian-Pacific main stock indexes, precious metals, forex pairs, cryptos (including Bitcoin), global interest rates, energy markets, cultural trends and more.
On January 22, lean hog prices soared to multi-month highs. And, according to mainstream experts, the hog bulls are "showing solid power." But if you accept their timeline, you already missed one big opportunity in hogs. And, you'll likely continue to miss the ones across the future commodity board.
When you look at 100+ years of the stock market history, our current juncture comes into a different -- and eye-opening -- Elliott wave perspective. Watch our Global Market Strategist explain the implications.
The stock market often behaves contrary to what observers might expect. Get insights into "bubbles" and learn about a phenomenon which occurs at major market peaks.