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Low-Hanging Fruit for When Inflation Isn’t so ‘Transitory’

by | Aug 19, 2021

Folks, there’s a lot of news going on this week despite it being one of the slowest times of the year. So Joy of the Trade Head Trader Jeff Zananiri and I had no shortage of things to talk about in our weekly roundtable. But the topic that always seems to come up when talking about trading is “transitory” inflation — meaning temporary.

The Federal Open Market Committee (FOMC) met Wednesday and could begin tapering — slowing its bond purchases — some time before the end of the year. But here’s what Jeff and I see happening…

The Fed will plan to start tapering in the fall, then the stock market will pull back. 

In a knee-jerk reaction, the talk of tapering will go away and an already bad policy decision will be made worse.

But here’s what really bothers us… “Transitory” inflation isn’t really transitory at all!

An Emerging Trend in Trading ‘Transitory’ Inflation

All you have to do to see that inflation is rising is take a trip to the grocery store. Heck, I went shopping — for the first time in forever — for a little barbecue I was having…

I couldn’t believe the prices! It’d be cheaper to take everyone out to a restaurant.

And during our discussion, Jeff made a good point… Is inflation really “transitory” if those prices never come back down?

Certain inflated stocks — like lumber — did finally come down. But that’s not happening in commodities, and I don’t see it happening in food. If the price of chicken goes up from $5 to $8 in less than a year, and then only grows to $9 the next year… that’s not transitory!

Sure, the price jump might have been, but that inflation stuck. And Jeff said it best: It’s just semantics.

But lucky for you, even though your grocery runs got more expensive, I’ve found some low-hanging fruit to trade so-called “transitory” inflation that I have a good feeling about.

So sit down with Jeff and I as we talk volatility, Cathie Wood, foreign markets and everything in between. Make sure to subscribe to our YouTube channel as well so you can always stay up to date with the markets.

WRITTEN BY<br>Roger Scott

Roger Scott

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