To The Moon

The inflation concern has been going on for many months and it is still a problem right now.

US consumer price index in March increased 8.5 per cent from a year ago, highest climb since 1981.

It doesn't help when Putin vowed to continue the invasion of Ukraine and doused any progress for peace talks. Inflation was already climbing prior to the war and the conflict has caused prices of energy and food to escalate further.

Most people expected the conflict to end within weeks but it has dragged on for months. It is even possible for it to go on for years and high prices can be sustained as a result.

The Fed has turned more hawkish lately based on their meeting minutes. Inflation is the number 1 issue right now. Discussions centred around selling off assets and steadily increasing interest rate. Those remarks simply sent the share and bond prices tumbling.

Market analysts are expecting the Fed to raise rates faster and higher than previous estimates.

New Zealand's central bank just announced a half a percentage point increase in interest rate. It doesn't seem a lot but it is the largest increase in 22 years. Inflation has risen to 32-year high in the country.

In Singapore, economists are expecting the Monetary Authority of Singapore (MAS) to strengthen Singapore Dollar in the upcoming April meeting to combat inflation. It could involve shifting the entire S$NEER band upwards (most economists predicted this), steepening the slope and/or widening the band.

But my view is that the monetary policies have been meek because central banks fear rapid increase in rates or tightening could harm the nascent economic recovery. They are definitely holding back.

Biden has been criticised for not alleviating the problem fast enough. His request to OPEC to raise oil production was not successful and the release of oil reserve is minuscule - about 1 million barrels a day which is about 5% of daily US consumption of 20 million barrels per day.

Hence the inflation problem will linger for a while and commodity prices would remain high. Gold prices have not been good at keeping pace with inflation lately and crypto has fared worse as the latter seems to be driven more by Fed's liquidity - tightening monetary supply correlated with the drop in crypto prices.

The best way to hedge inflation is via commodities or commodity related stocks. I recently compiled a list of commodity ETFs: https://www.drwealth.com/best-commodity-etfs/