Inflation

A fatal shortcoming lies beneath the academic papers that have relied upon “back-testing” to promote the 4% rule. Use our Premium membership service to add your logo and send this to clients.

So here we are: When investors aren't worried about inflation, they're worrying about recession. Tech companies are announcing hiring freezes and job cuts in growing numbers. Homebuilders are starting to talk about slowing demand and the supply of existing homes is rising. Walmart reported this week that it has excess inventories.

New graduates face fierce financial headwinds of soaring rent, ballooning student debt and inflation. The oft-repeated message to the young to “save early and often” may feel near-impossible. Still, it's worth highlighting the benefit of doing so for those who can somehow squirrel some money away.

The world economy is increasingly succumbing to the threat of stagflation reminiscent of its 1970s ordeal, a mounting headache for global finance chiefs already navigating the fallout from the war in Ukraine.

Treasuries gained for a second day as investors sought out the safest debt, driving the 10-year yield down 11 basis points to 2.77%, it’s lowest level since late April. Weaker than forecast US jobless claims and a sharp decline in a regional Philadelphia Fed survey spurred a burst of buying in Treasuries, with equities futures indicating that stock prices will open lower.

The Twitter spat about taxes and inflation involving President Joe Biden, Amazon.com Inc. founder Jeff Bezos and former Treasury Secretary Larry Summers has served mainly to prove that Twitter is a bad place to attempt intelligent debate. Still, the point at issue matters. It deserves a slightly less abbreviated treatment.

Like a supertanker, US debt-service costs only change course very slowly. But it’s happening now -- and from Washington’s point of view, the new direction is the wrong one: they’re heading up.

The world’s biggest retailer on Tuesday reported profit that fell short of Wall Street expectations and downgraded its outlook for full-year earnings per share from a mid-single digit increase to a 1% decline. Chief Executive Officer Doug McMillon said the bottom-line results were “unexpected” and reflecte the “unusual” environment. Walmart shares tumbled more than 11% on Tuesday, the most in 35 years.

The US economy won’t be able to avoid a bout of stagflation and markets have yet to tune into the risk of a significant slowdown in growth, said Mohamed El-Erian, the chair of Gramercy Fund Management and former chief executive officer of Pimco.

Bearish investors are snapping up bullish options to ensure that their defensively positioned portfolios won’t be left behind if the latest rebound in US stocks proves persistent.

Federal Reserve Chair Jerome Powell, in his most hawkish remarks to date, said the US central bank will keep raising interest rates until there is “clear and convincing” evidence that inflation is in retreat.

Plan for long-term Inflation that will be fought aggressively by the Fed, higher policy rates, and slower economic growth, according to Raghuram Rajan.

This article explores the benefits of annuities with lower explicit fees, a category I dubbed as “annuities Lite” in a previous article that focused on GLWBs.

The value of overall retail purchases increased 0.9%, after an upwardly revised 1.4% gain in March, Commerce Department figures showed Wednesday. Excluding vehicles and gas stations, sales rose 1% last month. The figures aren’t adjusted for inflation.

Local-currency debt from developing nations -- which is far more sensitive to a country’s domestic inflationary pressures than dollar denominated equivalents -- has slumped almost 9% this year, the most since at least 2008, according to a Bloomberg index.

The euro hasn’t been this cheap against the dollar for almost two decades, but it can get cheaper still. The tail risk of Russian gas and oil being suddenly shut off, most likely plunging the European continent into a sharp recession, is too unpredictable for investors to confidently bet on a rebound any time soon.

It’s been a brutal stretch for retail traders. Stocks are approaching a bear market. A selloff wiped $200 billion off cryptocurrencies in a single day. And Morgan Stanley found that amateur investors who jumped into the market when lockdowns began in 2020 have lost all their gains.

Equities reversed course and came off highs after Chinese economic data released Monday showed a sharp contraction as Covid lockdowns stung. Wheat jumped after India restricted exports, adding to broader commodity price pressure.

The seasonally adjusted median home sale price jumped 3.6% in April from March, the biggest increase in Zillow data dating to 2012. Inventory is starting to rise slightly, but it’s still so low that it’s vastly outstripped by demand, fueling housing appreciation.

The soaring dollar is propelling the global economy deeper into a synchronized slowdown by driving up borrowing costs and stoking financial-market volatility -- and there’s little respite on the horizon.

Deep-seated trends in trade and demographics helped keep inflation in a comfort zone for decades, but both are now pushing in the opposite direction. Globalization was fraying even before pandemic and war made things worse. Growth in the world’s labor force has slowed.

Historical data shows that stock markets have reacted poorly when the Fed has contracted its balance sheet and reduced liquidity – and the effect is more pronounced when Fed actions deviate from what the market expects.

In just more than a week, US Federal Reserve Chair Jerome Powell has gone from expressing confidence that policy makers will be able to avoid pushing the economy into a recession while rapidly raising interest rates to control inflation to remarking, as he did on Thursday, that a downturn is out of the central bank’s control.

Since the 1990s, the CalPERS sold LTC policies to its residents. The lawsuit over claims related to those policies illustrates the dangers clients face with government-sponsored insurance programs.

The U.S. debt cannot be paid, even in inflated dollars. Serious inflation is inevitable that will crash stock and bond markets, in addition to devaluing the dollar.

The Fed is at a crucial junction, according to Lacy Hunt. It has to contain inflation. If not, the stability of the U.S. economy over the longer term is seriously in doubt.

In 1995, Treasury Secretary Robert Rubin asserted that a strong dollar is in the US national interest, a mantra repeated by each of his successors. They’re partially correct since the effects of the robust buck, which has soared this year, help some while harming others.

Surging inflation showed little sign of abating last month, indicating that grocery bills will keep going up, markets will remain volatile and investors will continue to feel pain in their 401(k)s.

The latest US inflation report should be a reality check for Wall Street, but many investors are still wearing rose-colored glasses. Bond yields ticked slightly higher Wednesday after the Labor Department reported that consumer prices rose more than forecast last month, but they are still nowhere near reflecting the monetary policy path it may take to rein in inflation.

Federal Reserve officials face pressure for more aggressive action after a hotter-than-expected inflation reading for April, though so far officials are sticking with their strategy to keep raising interest rates by a half point at each of their next two meetings.

As markets slumped in unison on Thursday, traders pointed to the chaos in crypto as a focal point of their concern. Strategists are increasingly worried that small traders, already nursing losses from the meme stock craze, will be wiped out on their crypto holdings and sell everything else.

Feeling a bit cheated when you look down at your plate? It’s not just a figment of your imagination — portions at US restaurants are indeed getting smaller. Call it shrinkflation: when sizes shrink, but you’re paying the same price, or sometimes even more, for the meal or product.