Where Are We Headed Next With Inflation?

The past few years have been all about one word: inflation... But the reality is that many investors aren't really all that familiar with dealing with a true inflationary environment. While we had some flurries of inflation over the past couple decades, unless you were investing back in the early 1980s you hadn't seen anything […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] Where Are We Headed Next With Inflation? By Enrique Abeyta --------------------------------------------------------------- [Warren Buffett calls this kind of money-making "the best business in the world."]( One famous investment generated 60,000% returns... Whitney Tilson just discovered a way that you could get your money into this amazing business. But you must move fast. At midnight tonight we’re pulling down all information about this opportunity... [Go here now to check it out](. --------------------------------------------------------------- The past few years have been all about one word: inflation... But the reality is that many investors aren't really all that familiar with dealing with a true inflationary environment. While we had some flurries of inflation over the past couple decades, unless you were investing back in the early 1980s you hadn't seen anything like these levels. Just take a look... We use the version of inflation that includes food and energy. While those are considered "non-core" by economists and the U.S. government, they feel pretty core to us when we need to drive to dinner. Over the past couple years, the complexities of the post-COVID period created many cross currents that made it difficult to predict what would happen with inflation. But [back in August]( I did make a call for where inflation was likely to be going – way down! And since then, we've seen a massive drop in inflation. Part of my prediction was based on simple math. Inflation went much higher in 2021 and 2022 from low numbers back in 2020. The COVID-related disruptions created an environment where inflation almost went negative. When looking on a year-over-year basis, this created what we in finance call "easy comparables." It's easier to put up big year-over-year growth numbers when you're going against very low numbers. When you do put up very high year-over-year growth numbers, you know what else happens? You create what we call "tough comparables." It becomes very easy to see numbers going down. That was the main basis for the prediction last year for inflation heading much lower. And regarding the origins of this inflation, a big part of it comes down to the incredible disruptions of the COVID period... which created huge supply chain problems that were unique in decades. --------------------------------------------------------------- Recommended Link: [An Invisible Railroad Is Scheduled to Hit American Cities In July]( Although impossible to see, touch, or hear... This railroad will render every gas station, every charging station, and every plug-in utility obsolete – overnight! Current shareholders could earn as much as $156,700, but the stakes are EVEN HIGHER for new investors. [Click here before July 31](... --------------------------------------------------------------- So what happens next? Let's go back to math... The highest headline growth inflation number we saw last year was in June – coming in at 9.1%. As you can see in the table below, inflation stayed above 8% over the next three months but really began to sink at the start of 2023... The key from here is to begin to look at these comparable numbers. We wouldn't be surprised to see inflation continue to move down from current levels – perhaps even to the "targeted" 2% number that's often cited by the U.S. Federal Reserve. But based on the current strength of the economy and employment – along with the easier comparables – I wouldn't expect inflation to persist at that 2% level. Instead, it could end up somewhere between 2% and 5%. That might sound terrible, but not so fast... If we go back 40 years to 1983, the average monthly year-over-year growth in inflation was about 2.7%. There were periods like 2011, 2006 to 2008, and the late 1980s into 1990 where this average was closer to the levels I'm talking about. My view has always been that the issue with inflation wasn't necessarily the absolute numbers we're seeing, but rather the rate of change. A 9% number certainly wasn't good... but I didn't think it would persist for long. The bigger issue was going from 0.1% inflation in May 2020 to that 9% in just under two years. That kind of move is highly disruptive in our economy. But what isn't as disruptive is a move from 2% to 4.5% or even an absolute level of inflation in the 4% or 5% range. I also have a very unpopular view that the Fed might agree with this... But how could that be, when Fed statements have reiterated the 2% target level? It's called "jawboning" – an attempt to persuade or pressure by force of one's position of authority. If you want inflation to come down from 9% to mid-single digits, you tell the market you want it at 2% or less and add additional pressure. We might start to see a lot of headlines in the coming months and into 2024 about the "return" of inflation and how it is a concern for the stock market. Ultimately, I don't think they will make a difference... and investors should look past the "noise" of these potential headlines. In my Empire Elite Trader service, we've also been looking past the market noise to take advantage of short-term trading setups... In fact, we've been on a major roll recently. So far this year, we've booked 27 winning trades out of 29 total closed positions with an average return of 6% in 98 days, or 23% annualized. Some of our recent short-term winners include... - 28% in 26 days on Tesla (TSLA) - 22% in 28 days on H&E Equipment Services (HEES) - 25% in four months on Zions Bancorp (ZION) - 15% in four months on U.S. Bancorp (USB) - 13% in four months on Fifth Third Bancorp (FITB) - 12% in three months on M&T Bank (MTB) If you aren't already a subscriber, you can learn how to take your trading to the next level with Empire Elite Trader and how to start making these kinds of gains yourself by [clicking here](. Regards, Enrique Abeyta July 28, 2023 --------------------------------------------------------------- If someone forwarded you this e-mail and you would like to be added to the Empire Financial Daily e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2023 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 1125 N. Charles Street, Baltimore, Maryland 21201 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](