📈Peaking Too Early

Inflation is transitory. No wait... it's peaking! Uh...

We’ve seen over a year of headlines claiming inflation “may have peaked.” As we all know painfully well, those claims have not been true and increasingly seem to be media wishcasting than anything resembling actual analysis.

What should be your next move?

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We haven’t written about anything topical over the last month, largely because we have already covered most of the major headlines and also because it’s summer and we just couldn’t be bothered.

But earlier this week the Consumer Price Index or CPI was published which showed that inflation hit another recent high of 9.1% which is, uh, extremely high. 

In fact, that would be the highest it has been in over 40 years meaning a lot of our readers (and everyone writing this blog) weren’t even born the last time this happened. These charts are starting to get pretty insane.

This matters for a lot of reasons. We covered this multiple times, including one of our first articles over a year ago. If you would like a refresher on what CPI is or why it matters, check it out below.

Inflation Nation

Back then, inflation was only around 5% and the catchword of the year was “transitory,” meaning this inflation was not here to stay. The thinking was that it was due to Covid and stimulus checks and ports, or whatever else was happening in 2021. Back then articles in the media were already calling for a “peak” in inflation.

As time has dragged on this has become the new buzzword. 

“Sure inflation is high, but it’s peaking!”

But month after month after month, the peak grew higher and higher.

Inflation is hard to predict and can often happen for a lot of different reasons that are varied and unpredictable. (We may or may not have called for a peak around 7%, what do you want from us? It's a free newsletter you goons)

Earlier in the year, it was driven by used cars and chip shortages. Then Russia invaded Ukraine, disrupting the commodity markets. All while the job market remains strong and wages continue to grow as employers scramble to fill positions and people level up their careers. Last month rent prices rose drastically, causing the number to exceed even the highest expectations. 

Given how spectacularly wrong economists, media members, politicians, and even blog boys have been about inflation, you would think that this week’s blowout number would make people stop calling for a “peak” right?

Here is the Wall Street Journal mere hours after the surprisingly (4 decades!) high inflation reading.

Meanwhile, inflation has been telling us for the past year…

So the debate rages on: has inflation peaked? Many signs point to that but as we have seen the last couple of years, the world is more than happy to throw us curveballs. If anyone had a global pandemic and a proxy war between Russia and the West then go buy yourself a lotto ticket.

Unfortunately, this isn’t one of those fun debates like MJ vs Lebron (MJ) or did we actually land on the moon? (Yes, but I like to argue we didn’t). This affects consumers every day and everywhere you look. Since last year…

• Rent is up 6% (housing even more)

• Food is up 10%

• Gasoline is up 60% !!!

These are necessities not luxuries. This is currently the most important thing going on in the economy. And with the Fed focused on fighting this we may be in for more uncertain times in the markets. 

What’s the upside?

Losing purchasing power due to inflation is very difficult and frustrating especially when your bank account is still giving you less than 1% most likely. Combine this with the recent shakiness in the stock market and we are getting a lot of questions from people about how to navigate this. 

We pointed out at the start of the year that the stock market may be in for a rough ride. This does not mean you shouldn’t invest in the market, for long-term investments like retirement this is still far and away the best way to protect against inflation. However, it does mean for short-term (<1 year) or mid-term investments (1-3 years) you may want to consider safer alternatives including our old friend I bonds. 

Hit it Kunu

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For Your Weekend

Read:

The Never-ending Quest to Adapt ‘Resident Evil’ by Miles Surrey (The Ringer)

Stop me if you’ve heard this one before: a new Resident Evil project has dropped. This time, Netflix has created a live-action series based on the Resident Evil video games that is also called, simply, Resident Evil. The TV adaptation shouldn’t be mistaken for the six-part film franchise from shlock god Paul W.S. Anderson—the first of which was also titled Resident Evil. As for the show’s first episode, “Welcome to New Raccoon City,” which jumps between two timelines in 2022 and 2036, it’s worth stressing that it bears no relation to Resident Evil: Welcome to Raccoon City, the 2021 big-screen reboot that takes place in 1998. (I mean, for starters, the movie is set in Raccoon City, not New Raccoon City.) It’s important to get this all out of the way because when it comes to the Resident Evil franchise, it can often feel like history is repeating itself.

Chuckle: