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Scott Barlow's opener in his daily round-up in the G&M today puts a spotlight on Credit Suisse's Andrew Garwaite forecasting some inflation pressure in the near future, which wouldn't be great for those nearing (including me) or in retirement from a savings and investment perspective. The case for, is based on expectations of central banks allowing inflation to run higher while employment recovers from the pandemic, minimum wage hikes, and de-globalization efforts. In additional, the resulting higher bond yields would put downward pressure on dividend equity prices, with hopefully their yields untouched. The suggested inflation fighting asset classes are stuff like raw materials and gold.

The counter argument, is that we will likely see low demand, prices, and correspondingly yields, low for a long time due to secular trends, like aging demographics.
 

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Credit Suisse's Andrew Garwaite forecasting some inflation pressure in the near future
I think it's very difficult to forecast this with all the unknowns about how the economy is shaping up. There is no precedent for the situation we're in right now. There hasn't been an economic contraction this sharp in recent history, and there also has not been central bank stimulus this aggressive ever before in history.

I would argue that no economist or analyst can really model or forecast the current situation. I could guess at this too but it's kind of a pointless exercise.

Any time central banks are accommodative (as they are right now) analysts always point out the inflation risk. They are correct, but they say this every time the central banks print money. So this was a fear we heard about in 2002-2003, and again since 2009, and also a fear in Japan for 30 years. But there wasn't any inflation in any of these cases.

Maybe this time it will play out differently and actually spark inflation. Who knows?

This is why I really like the diversified portfolios like Permanent Portfolio and All Weather. These allocations (including some gold) are designed to respond reasonably well whether you get inflation or deflation.
 

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By the way, I find these financial articles entertaining, but they're pretty useless in practice. Same as CNBC. Videos like this are fun to watch (this is Shiller forecasting deflation) but not useful.

In the G&M article, Scott Barlow writes:

It’s too soon to prepare now, but the time may come when investors will need to switch to inflation fighting asset classes like raw materials and gold, in what would represent an uncomfortably major change from the successful investing strategies of the past decades.
Uh, yeah, ok Scott. I'll just hang around until I get the memo that it's time to switch into inflation fighting assets. Please remember to notify me! Or maybe the G&M will run a headline when it's time?

Can you imagine anything so silly?

I actually like watching and reading these kinds of things for pure entertainment, sometimes along with an evening drink.

Gundlach is another fun one. Here's one of his interviews on youtube.

I think the characters from the investment banks are a bit more dangerous, because one could almost think they are legitimate forecasts. In reality, none of them have any clue what's going to happen.
 

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Governments around the world are handing out free money, and spending like crazy.
We're going to have either.
1. Massive debt.
2. Inflation.

I can't imagine anyone is going to hike taxes enough to pay for COVID19.
 
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