As we wrap up 2020 and move into 2021, the world faces multiple systemically important issues.
The biggest ones are:
● Will the COVID-19 vaccine work?
● Will the U.S. economy recover to where it was pre-COVID-19?
● Will Donald Trump leave the White House quietly or will the U.S. more into greater political turmoil?
How these issues will be resolved remains to be seen. So we are in very uncertain times in the world.
The ONLY thing we DO know for certain is that EVERY major problem going forward is going to be dealt with by printing money.
And because for the first time in decades MUCH of this money will actually funnel directly into the actual economy, HOT inflation will finally ignite.
The markets have already begun to discount this.
The Fed’s own research has stated that the single best predictor of future inflation is FOOD inflation.
I realize this sounds odd. After all, publicly, the Fed states that its preferred measures of inflation are the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE).
And yet, the Fed’s OWN RESEARCH has shown that these metrics do a horrible job of predicting future inflation. Not only that, but the Fed has KNOWN this since 2001!
In a little-known paper published back in 2001, Fed researchers wrote the following:
We see that past inflation in food prices has been a better forecaster of future inflation than has the popular core measure…Comparing the past year’s inflation in food prices to the prices of other components that comprise the PCEPI (as in Table 1), we find that the food component still ranks the best among them all…
St Louis Fed
I want you to focus on these two admissions:
1) The Fed has admitted that its official inflation measures do not accurately predict future inflation.
2) The Fed admitted that FOOD prices are a much better predictor of future inflation. In fact, food prices were a better predictor of inflation than the Fed’s PCE, non-durables goods, transportation services, housing, clothing, energy and more.
With that in mind, take a look at the below table taken directly from the Bureau of Labor Statistics’ website:
Notice that FOOD prices have shown the fastest rise out of all other components over the last 12 months, clocking in at 3.9%. The BLS itself states that:
1) All six major grocery store food group indexes are UP over the last year.
2) The increase in prices range from 2.6 percent (fruits and vegetables) to 6.1 percent (meats, poultry fish, and eggs).
3) The index for food away from home rose 3.9 percent over the last year, the largest 12-month increase reported for that index in over a DECADE (since May 2009).
If that was not worrisome enough, take a look at what is happening in agricultural commodities (the items that make up food).
What you’re looking at is the 10-year bear market in food prices ENDING. This chart is telling us that higher inflation is coming. And coming soon.
This is the BIG theme for 2021 no matter what else may come: more money printing, more inflation, and more explosive moves in inflationary assets.
Those investors who are well positioned to profit from it could see literal fortunes.
On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.
We are making just 100 copies available to the public.
As I write this there are just 56 left.
To pick up yours, swing by:
Chief Market Strategist
Phoenix Capital Research