Inflation is rising and so are investors’ fears about stocks

MarketWatch2021-02-22

Stocks actually are an inflation hedge but the market doesn’t see it that way If inflation is a threat to the stock market, we should be running scared. That’s because inflation expectations have ...

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Comments

mambo
2021-02-23
mambo
Wats go up, sure gt down
MrSoh
2021-02-22
MrSoh
Leave one comment
RTHS
2021-02-22
RTHS
Inflation is coming.
WYCKOFFPRO
2021-02-22
WYCKOFFPRO
bet on the start of commodity super cycle. copper, gold, big miners like rio, bhp, vale are beneficial.
Sallyoo
2021-02-22
Sallyoo
Pls comment and like
- Sallyoo:
  Y
- Sallyoo:
  Y
- AppleMango:
  Hi, Pls reply back n like
TerenceTan
2021-02-22
TerenceTan
Hmm food for thought

Leave a comment

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That’s because inflation expectations have ...</p>\n\n<a href=\"https://www.marketwatch.com/story/inflation-is-rising-and-so-are-investors-fears-about-stocks-11613703814?mod=home-page\">Source Link</a>\n\n</div>\n","source":"market_watch","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Inflation is rising and so are investors’ fears about stocks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nInflation is rising and so are investors’ fears about stocks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-02-22 11:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/inflation-is-rising-and-so-are-investors-fears-about-stocks-11613703814?mod=home-page><strong>MarketWatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Stocks actually are an inflation hedge but the market doesn’t see it that way\nIf inflation is a threat to the stock market, we should be running scared. That’s because inflation expectations have ...</p>\n\n<a href=\"https://www.marketwatch.com/story/inflation-is-rising-and-so-are-investors-fears-about-stocks-11613703814?mod=home-page\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":".IXIC","symbol_name":"NASDAQ Composite","start_time":0,"source_url":"https://www.marketwatch.com/story/inflation-is-rising-and-so-are-investors-fears-about-stocks-11613703814?mod=home-page","article_id":"1116222553","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1116222553","pubTimestamp":1613965197,"sourceInfo":{"source_id":"market_watch","name":"华尔街大事件"},"weMediaInfo":null,"summary":"Stocks actually are an inflation hedge but the market doesn’t see it that way\nIf inflation is a thre","collect":0,"end_time":0,"defaultTopTitle":"marketwatch.com","property":[],"viewcount":null,"language":"en","relate_stocks":{".IXIC":"NASDAQ Composite",".SPX":"S&P 500 Index",".DJI":"道琼斯"},"translate_title":"通货膨胀在上升，投资者对股票的恐惧也在上升","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{".DJI":0.9,".IXIC":0.9,".SPX":0.9},"content_text":"Stocks actually are an inflation hedge but the market doesn’t see it that way\nIf inflation is a threat to the stock market, we should be running scared. That’s because inflation expectations have spiked dramatically in recent weeks. The 10-year breakeven inflation rate — what the bond market currently is betting inflation will average over the next decade — is now higher than it’s been in five years.\nAs you can see from the accompanying chart, expected 10-year inflation stood at just 0.50% last March; this past week it got as high as 2.24%.\n\nIn truth, inflation is not the threat to the stock market that most investors believe. If inflation continues to heat up in coming months and investors react by dumping stocks, you might want to consider it as a buying opportunity.\nThese are the conclusions I reached after interviewing Richard Warr, a finance professor at North Carolina State University. Warr co-authored a seminal 2002 study in the Journal of Financial and Quantitative Analysis which found that equities actually are a good long-term hedge against inflation. His co-author was University of Florida finance professor Jay Ritter.\nWarr explained that stocks are a hedge because inflation impacts equity valuations in two ways which largely offset each other:\n\nHigher inflation means that future nominal earnings must be discounted at a higher rate when calculating their present value.\nCorporations are able to charge more when inflation is higher. Because of this greater pricing power, their nominal earnings in future years will be higher than they would have been otherwise.\n\nNotice the small net effect of these two factors: Nominal earnings will be higher but must be more heavily discounted. This isn’t just theory, by the way: Over the last 150 years, real (inflation-adjusted) growth rates for the S&P 500’sSPX,-0.19%earnings per share have remained relatively stable in the wake of changes in the inflation rate, while nominal EPS growth rates have tended to rise and fall in line with those changes.\nInvestors typically focus on just the first of these two consequences of inflation, Warr said. That is, they (at least implicitly) realize that inflation reduces the value of future nominal earnings, but overlook that those nominal earnings will themselves be higher. This lopsided view is due to a trait that economists call “inflation illusion.”\nThis illusion works to be the benefit of stocks when inflation is declining. When that is the case, investors extrapolate into the future the artificially high nominal earnings growth of earlier higher-inflation periods. The result is unreasonably high valuations.\nWhen inflation begins to rise, in contrast, investors make just the opposite mistake: They extrapolate into the future the lower earnings growth firms produced during the previously low-inflation period. This leads them to conclude that equity valuations must come down as inflation heats up.\nRational versus behavioral models of investor behavior\nNotice that two distinct models of investor behavior are needed to explain the market’s reaction to higher inflation. The rational model shows that inflation should have little net impact on equity valuations, while the behavioral model predicts that investors will nevertheless behave irrationally.\nMight investors have learned from their past irrationality, and therefore not dump stocks if inflation heats up even more in coming months? Warr said that, while anything is possible, he wouldn’t bet on it. “Most current investors have lived most of their lives in a low-inflation environment, so they have had no opportunity to learn the lessons that history teaches us about inflation and the stock market.”\nIf Warr is right, then rational investors in coming months will have an opportunity to pick up stocks at lower valuations.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":369838131,"gmtCreate":1614015318723,"gmtModify":1704887016607,"author":{"id":"3572317422941687","authorId":"3572317422941687","name":"mambo","avatar":"https://static.tigerbbs.com/cf9c3d4882d02ccb0b221aeddc00167d","vip":1,"crmLevel":4,"crmLevelSwitch":0},"htmlText":"Wats go up, sure gt down&nbsp;","listText":"Wats go up, sure gt down&nbsp;","text":"Wats go up, sure gt down","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/369838131","repostId":1116222553,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":369048436,"gmtCreate":1613992540025,"gmtModify":1704886567895,"author":{"id":"3574575782343795","authorId":"3574575782343795","name":"MrSoh","avatar":"https://static.tigerbbs.com/c5bdec030dd49d0dabdf0b9138e4311a","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Leave one comment&nbsp;","listText":"Leave one comment&nbsp;","text":"Leave one comment","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/369048436","repostId":1116222553,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":360701100,"gmtCreate":1613972759700,"gmtModify":1704886318157,"author":{"id":"3573788699963679","authorId":"3573788699963679","name":"RTHS","avatar":"https://static.tigerbbs.com/7a67db1aa66a6dfb5a57beb47fd4119a","vip":1,"crmLevel":2,"crmLevelSwitch":1},"htmlText":"Inflation is coming.","listText":"Inflation is coming.","text":"Inflation is coming.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/360701100","repostId":1116222553,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":360472052,"gmtCreate":1613971995676,"gmtModify":1704886308036,"author":{"id":"3574982782498607","authorId":"3574982782498607","name":"WYCKOFFPRO","avatar":"https://static.tigerbbs.com/e6df9a333ebef85a0ceac10611fda7c0","vip":2,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"bet on the start of commodity super cycle. copper, gold, big miners like rio, bhp, vale are beneficial.","listText":"bet on the start of commodity super cycle. copper, gold, big miners like rio, bhp, vale are beneficial.","text":"bet on the start of commodity super cycle. copper, gold, big miners like rio, bhp, vale are beneficial.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/360472052","repostId":1116222553,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":360446008,"gmtCreate":1613970522004,"gmtModify":1704886292415,"author":{"id":"3575444016531170","authorId":"3575444016531170","name":"Sallyoo","avatar":"https://static.tigerbbs.com/41b2ed5423d3f03bc394c43d718c92cd","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Pls comment and like&nbsp;","listText":"Pls comment and like&nbsp;","text":"Pls comment and like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":3,"repostSize":0,"link":"https://ttm.financial/post/360446008","repostId":1116222553,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":3694265,"gmtCreate":1614654902215,"gmtModify":1680778819682,"authorId":3575444016531170,"author":{"id":3575444016531170,"authorId":3575444016531170,"name":"Sallyoo","avatar":"https://static.tigerbbs.com/41b2ed5423d3f03bc394c43d718c92cd","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":360446008,"type":1,"supId":0,"prevId":0,"content":"Y","text":"Y","html":"Y"},{"id":3649864,"gmtCreate":1614161401095,"gmtModify":1680778136213,"authorId":3575444016531170,"author":{"id":3575444016531170,"authorId":3575444016531170,"name":"Sallyoo","avatar":"https://static.tigerbbs.com/41b2ed5423d3f03bc394c43d718c92cd","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":360446008,"type":1,"supId":0,"prevId":0,"content":"Y","text":"Y","html":"Y"},{"id":3629045,"gmtCreate":1613972558397,"gmtModify":1680777814301,"authorId":3567141277226150,"author":{"id":3567141277226150,"authorId":3567141277226150,"name":"AppleMango","avatar":"https://static.tigerbbs.com/68d3e430c230d4cfd4e97044c56f2b6d","vip":1,"crmLevel":5,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":360446008,"type":1,"supId":0,"prevId":0,"content":"Hi, Pls reply back n like","text":"Hi, Pls reply back n like","html":"Hi, Pls reply back n like"}],"langContent":"EN"},{"id":360448810,"gmtCreate":1613970446230,"gmtModify":1704886291435,"author":{"id":"3575639261045142","authorId":"3575639261045142","name":"TerenceTan","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":1,"crmLevelSwitch":0},"htmlText":"Hmm food for thought","listText":"Hmm food for thought","text":"Hmm food for thought","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/360448810","repostId":1116222553,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":47,"commentSize":12,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; 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