Broker Check

Stagflation?!?

May 02, 2022
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Stagflation is bad. Say it again out loud. Now say it again. I need you to really understand. 

With all of the economic tribulation the past few years it can be hard to understand the landscape, so let's look to history and make some comparisons:

  1. What a year! Energy prices skyrocketed due to an embargo led by OPEC, resulting in crude prices doubling from 1973 to 1975. 2020: Oil prices plummet  resulting in a massive overstock and gas prices dropping to less than $1.00/gallon. 2021: This week: A European embargo of Russian oil is expected due to the war between Russia and Ukraine. As I write this, the national average for a gallon of unleaded gasoline is $4.19 - an increase of over 323%.

In the the early 1970's inflation rose to 5.5% and then continued to trend up in a range from 5.5–14.4% through the mid-late 1970s before culminating at 14% in 1980. 

Today, official government statistics report inflation at 8.5%. However, when adjusted for purchasing power, it is best to look to use the same calculation methods used in the 80's.  Using the more accurate calculations we see inflation at about 17% currently with no signs of slowing. 

GDP growth during inflation can create a negative market effect. It's a double-edged sword. Luckily, recent GDP numbers are down. It sounds counter-intuitive, but helps smooth the markets.

The US dollar is strengthening. During the early 1970's the same situation occurred. Right... so this is not good. When US made goods are expensive the rest of the world stops buying and exports drop. The strengthening dollar was arrested by the FED. How? The FED rate was raised to 20%.

We survived that. We will survive this. Protect your assets now. The markets will correct themselves. 

Then what? When will the markets turn?  Will they come back sector by sector or all at once? What about domestic and international politics, regulations...What else should you be looking for??? Nothing, actually.

If you want guesses, watch the news. If you want real protection coupled with the best growth potential, call us today. Global View's Actively Managed portfolios do not guess. Neither should you. We act based off of proven quantative signals, unbiased by emotion, field tested and proven. 

If you're part of our Global View family, you are already protected. If you aren't yet, we welcome you. We are Fiduciaries and you are our only concern. 

We were built for this. Don't guess. Don't stress. Reach out and we'll win together.