The 'Experts' Are Wrong About Inflation

Inflation has been a wild ride over the past few years... going from 0.1% during the pandemic... to 9% in June 2022... to about 3.2% today.

It's a polarizing topic. Everyone wants to talk about it at dinner parties. But no one knows what the Federal Reserve will do next.

But we've been right on inflation across our Retirement Millionaire, Income Intelligence, and Retirement Trader newsletters.

First, many "experts" warned of inflation rising in the shadow of the 2008 financial crisis after the Fed expanded the money supply. We said it wasn't going to happen. It didn't.

Then in 2018, we started to highlight that the strong labor market and growth risked finally stoking inflation. It did start to tick up, but then the pandemic stimulus really ramped things into overdrive.

We then argued it wouldn't be transitory – when everyone was saying it would be. Here's what we wrote in Retirement Trader in September 2021 – when inflation readings were hitting 4% and Federal Reserve Chair Jerome Powell kept pounding the transitory narrative...

But today, the economy is finally heating up. Plus, full employment leads to higher wages as businesses compete for workers. And more people buying more goods drives up the price.

Have you noticed that the price of corn is up 43% over the past year? Or that gasoline prices are up 50%? Or even that homes are being sold for nearly 17% more than they were last year?

Inflation is here. And it's not going away anytime soon.

And finally, when inflation was around 9%, we said that we were past the worst of it.

True the whole way.

Well, now, after a handful of soft inflation reports, people think the inflation story is totally over. But we think they have gone too far...

You can look at inflation expectations by comparing interest rates on different inflation-protected bonds. These are called the inflation "breakevens."

Expectations have dropped sharply, and markets now expect inflation to come in at 2.18% per year for the next five years...

That's too low... Currently, inflation sits just over 3%. It will take time to decline further. To even that out to 2.18%, that means markets think inflation will go below 2% and spend some time there.

We're not worried about hyperinflation. But in our view, we'll likely see 3% to 4% inflation around the world for another few years. That's not enough to ruin your trip to the grocery store, but it's enough to affect financial markets and the "real" return on your investments.

And the markets could take a hit once investors realize this.

As we've written recently, we expect to see more volatility in stocks in the near future. And inflation is just another reason for it.

This is the exact kind of volatility my friend Marc Chaikin said to expect when he predicted a volatile bull market had begun on January 17 of this year...

Fortunately, Marc says this bull market is the perfect environment to apply a strategy he designed for this kind of moment.

It has already shown folks how to earn gains like 76% in four months... 85% in three months... 75% in just 40 days... and a remarkable 113% in only 26 days.

So if you want to try Marc's timely market strategy risk-free, today is your last chance.

What We're Reading...

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
August 30, 2023