Chart Storm For The New Year | Weekly Round Up
Inflection Point
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The Channel of Inflation Is Bad for Bonds and Stocks
Inflation is bad for bonds. It's bad for stocks only if bonds and stocks sell off. If bond prices stay where they are in the face of seven % inflation, as we have seen this year, then real rates are extremely negative. And that can be very good because inflation actually increases a company's earnings. The two time periods people like to refer o rite back the the 19 seventies and the 19 forties, which were the two periods, and n living memory, wright, in the us, where we actually had some form of inflation.
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