Inflation is coming! Inflation is coming! You are going to hear this more and more as 2011 marches on.
To date, inflation has been occurring primarily in the emerging countries: China, India, Brazil, Venezuela, South Korea, Thailand, and Indonesia, amongst others. The biggest culprit has been volatile food prices. However, the volatility of commodity prices that existed throughout 2010 has impacted many developing countries, especially in Europe, threatening food supplies, and causing civil unrest in such countries as Tunisia, Algeria, and Egypt. Oil, sugar, and rice have all sky-rocketed.
In the United States, with high unemployment and spare capacity, inflation has been subdued. But it is like a coiled spring ready to snap. All that fiscal stimulus eventually has to lead to rising inflationary forces, which will cause rising interest rates, which will restrain economic growth, which will impede lowering unemployment, which will restrain consumer spending, which will cause rising interest rates, which will restrain economic growth, …
Action has been taken on the inflationary front by China, India, and other countries. All of this has made many stock markets very nervous. Only three
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Bob Weir, B.Sc., B. Comm, CFA: Bob Weir has 43 years of investment research and analytical experience in both the equity and fixed-income sectors, and in the commercial real estate industry. He joined eResearch in 2004 and has been its President, CEO, and Managing Director, Research Services since May 2005. Prior to joining eResearch, he was at Dominion Bond Rating Service (DBRS), latterly as Executive Vice- President responsible for supervising the firm’s 34 analysts and conducting the day-to-day management affairs of the company. You can find more of Bob Weir's work by visiting www.eresearch.ca.