Adieu Galloping Inflation?

Until 2021, the global economy had experienced a long period of disinflation, characterized by progressively lower increases in key consumer and producer price indexes, culminating in an inflation rate broadly consistent with central bank target (i.e., 2 percent). Indeed, in most developed countries the actual level of price increases had persistently fallen short of that …

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Unlike Diamonds, Inflation is Not Forever But May Prove Sticky

Amid the current financial scare, fueled by anxieties about economic overheating, it is easy to forget that, until recently, prices were well-behaved and central bankers struggled to lift them sufficiently to meet their 2-percent target. Indeed, many developed and even developing countries had experienced over a long stretch of time disinflation, characterized by progressively lower …

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How much and for how long will interest rates cause pain?

Interest rates have risen abruptly and sharply in all the major economies except for China and Japan. As usual, the United States, still the global economic locomotive, even if a diminished one, has paved the way, with Australia, Canada, Euro area, New Zealand, Singapore, South Korea, Sweden, Switzerland, and the United Kingdom following suit. The …

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Calmer Waters in the Months Ahead?

The first half of 2022 had been a nerve-racking experience for investors in financial assets, with inflation-proof instruments, particularly commodities, offering one of the few escape routes from the pain inflicted by endless Covid mutations, geopolitical shocks, and backward-looking fiscal and monetary policies. Looking forward, there is reason to believe that, despite the decidedly challenging …

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Disciplined long term investors should expect antigravity – if the past is prologue

Whilst it is generally true that ‘what goes up must come down’ in the physical world, financial markets can differ and ‘what goes down usually comes up’ may be more appropriate. Markets are, in a way, capable of antigravity in the long term and much more likely to set new highs than return to previous …

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Volatility and having a disciplined investment plan in the current stock market

During the first part of this year we experienced a significant increase in volatility. In the first 4 months of 2022, the S&P 500 declined around 13% (Source: S&P Dow Jones Indices; as at 3 May 2022).  This could be categorized as an “average” correction and was likely overdue, given the strong market performance of …

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