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Transitory Hyper-Inflation?

Transitory Hyper-Inflation?

May 12, 2021

We are continuing to watch increasing signs of coming higher inflation. There is a real price squeeze ("transitory" inflation according to Federal Reserve Chair Jay Powell) affecting businesses, consumers, investors, and especially the unemployed. 

With the unemployment rate at 6.1% in April, employment numbers have not improved anywhere near government expectations.  The number of unemployed workers sits at 9.8 million compared to 5.7 million in February, 2020, a difference of 4.1 million. (  To put this in perspective, Los Angeles has 3.9 million residents, and San Antonio, San Diego and Dallas combined have approximately 4.2 million residents.1  Many unemployed workers are surviving on government stimulus packages, and may not be able to return to the jobs they once held.

Inflation can have a significant impact on your portfolio over time.  Different types of investments, i.e., stocks, bonds, real estate, commodities can perform differently in an environment of rising inflation.  Diversifying your portfolio with exposure to stocks and real assets such as commodities may help you shield your money against inflation.2 

The amount of government stimulus, supply chain issues (a whole other story), and the Covid-19 pandemic has created an historic triple whammy of unpredictability.   Buckle up, this may be a bumpy ride for months to come. 

One-Year Price Change % as of May 6th, 2021

Lumber: +347%
WTI Crude: +148%
Gasoline: +139%
Corn: +124%
Heating Oil: +123%
Brent Crude +121%
Copper: +94%
Soybeans: +84%
Silver: +76%
Palladium: +70%
Cotton: +63%
Sugar: +63%
Platinum: +57%
Wheat: +43%
Natural Gas: +38%

Update from Blog: Consumer Price Index vs Everyday Living Expenses 

Rogers International Commodity Index – Commodity Allocation

Corn 13.61%, Cotton 12.03%, Soybeans 10.03%, Wheat Soft Red 7.88%, Coffee 5.73%, Live Cattle 5.73%, Soybean Oil 5.73%, Milling Wheat 5.73%, Wheat Hard Red Spring 2.87%, Sugar 2.87%, White Sugar 2.87%, Cocoa 2.87%, Lean Hogs 2.87%, Lumber 2.87%, Rapeseed 2.87%, Rubber 2.87%, Wheat Hard Red 2.87%, Rice 2.15%, Soybean Meal 2.15%, Orange Juice 1.72%, Oats 1.43%, Milk Class III 0.29% = 100.00%

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diversification and asset allocation do not protect against losses or guarantee returns.

Data and rates used were indicative of market conditions as of the date shown. Opinions, estimates, forecasts and statements of financial market trends are based on current market conditions and are subject to change without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. Past performance is not a guarantee of future results.