The recent news that inflation hit highs not seen since the first Bush administration has undoubtedly unnerved more than a few investors. While the recent CPI figure is worse than expected, that doesn't mean there will be a return to the 1970s. While inflation may run hotter and more broadly through the end of the year, I still believe things will cool down next year as the economy completely recovers from the pandemic. I will talk about the effect I think this will have on the S&P 500 (SPY) and more in this week's commentary. Read on below….(Please enjoy this updated version of my weekly commentary published November 10, 2021 from the POWR Value newsletter).
Unless you haven't checked the news today, you must know the big topic is inflation. Inflation in the U.S hit a three-decade high last month, rising at a 6.2% annual rate. The consumer price index rose at its fastest annual pace since 1990 and topped 5% for the fifth consecutive month. Sequentially, the CPI jumped 0.9% in October from September.
This was a much higher jump from September's 0.4% increase. Inflation was driven by supply shortages and strength in consumer demand, which has pushed prices higher. Even core inflation, which excludes food and energy, rose 4.6% from the prior year.