I’ve always remained wary of inflation.
Perhaps it’s my experience growing up in the 1970s. Back then, it took until the early ’80s (and interest rates around 20%) to bring inflation back under control.
As a kid back then, I vividly recall the rationing at our local gas station… There were also food shortages when the grocery stores ran out of meat.
Many blame the oil embargo for much of that spike in inflation. Yet inflation didn’t ultimately peak at 14.76% until April 1980. That was six years after OPEC lifted its oil embargo on the U.S.
Instead, a range of other factors lay behind it…
There were increased budget deficits to fund the Social Security program. Plus we saw the unwinding of temporary wage and price controls, which caused inflation to surge.
This time is different, of course.
But whatever the causes, history tells us that inflation has a way of sticking around.
And that’s why I’m paying close attention to the current situation… which I believe is leading to chaos around the corner…
Rekindling Inflation?
A few factors are raising concerns about inflation as it stands…
Weakening jobs data was a major reason behind the Fed’s big 0.5% cut decision last month.
But the jobs market has regained strength over the past few weeks.
Additionally, the Consumer Price Index (CPI) inflation data came in up 0.2% month over month. That was 0.1% above market forecasts. The annual rate was 2.4% (also slightly above forecasts).
The numbers may seem small, but inflation had been trending down previously.
And that’s before we get to the fast-approaching election…
Depending on the result, we face a range of new tariffs on imports – which could potentially kick off a trade war – or big-spending government programs.
Both scenarios have the potential to rekindle inflation.
Right now, many in the market are still factoring in a 0.25% cut when the Fed meets in November. But I’m not so sure.
I believe we may only see one more cut this year – at the Fed’s meeting in December.
Of course, we have another round of jobs and inflation data – and the election – to come before the Fed’s next decision on November 7.
That could mean short-term volatility in our near future as market expectations adjust.
But I’m also seeing a key warning signal for the longer term… which I believe is leading us into the next “chaos period”…
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The Countdown to Chaos
A specific market indicator is flashing a red light… and almost no one is paying attention.
In the past, it has been incredibly accurate at predicting an imminent chaos period.
To be clear, I’m not seeing a crash ahead… But we don’t need a crash for the markets to utterly disrupt our portfolios.
We’ve only seen chaos periods four other times in the last 40 years. But each time, it meant disaster for people following the “buy and hold” method – especially if you’re nearing retirement.
So tonight, I’m going to explain all about the indicator I’m seeing, what it means for your portfolio, and how we can turn the chaos to our advantage.
I’d urge all my readers to attend. Click here to automatically confirm your seat.
If you are in any way concerned about inflation… the outcome of this election… or how to protect your portfolio in the months ahead, this is an event you do not want to miss.
I hope to see you there.
Regards,
Larry Benedict
Editor, Trading With Larry Benedict