Fortunately, some analysts believe that the burden may ease soon, and that we have reached an inflationary peak.
This week, the Federal Reserve will meet and is likely to announce plans to raise interest rates, a tool used to combat rampant inflation. However, investors fear that an acceleration of interest rate hikes could drag the economy into recession.
Ryan Detrick, chief market strategist at LPL Financial, believes that it’s possible that inflation has already peaked on its own, and that the Fed could start to taper off interest rates by the second half of the year.
Analysts at UBS also said this month that they expect inflation to peak in March and then decline “sharply”.
During the stagflation of the 1970s, viscous and elastic inflation grew. But flat inflation so far has been relatively flat compared to elastic inflation, which is a good sign that this may remain temporary.
Of course, it may take some time for viscous inflation to catch up, but Dietrich says he’s optimistic. He said the elastic inflation is like a rubber band, you can stretch it too far and it will still bounce back.
And while the shutdowns in China may hurt the global supply chain, the problems appear to be receding — at least for the time being. Dietrick said that if companies could easily get more supplies, then prices for items would fall and consumers wouldn’t pay much for goods and services.
Dietrick said the downward movement in inflation could be surprising as a result, especially for durable goods. However, he cautioned, it’s hard to tell if we’re seeing the light at the end of the tunnel or the oncoming train.
Buffett and Munger’s Big Day
Investors flocked to Omaha this weekend for Berkshire Hathaway’s annual shareholder meeting, the first since 2019.
Among all the ice cream and caramel cones, Berkshire revealed on Saturday that it bought more than $51 billion in stock during the first quarter of 2022, though Buffett described his current investment temperament as “sluggish.”
More than $3 billion of that was their own stock, but other big names included Chevron, Apple, Bank of America and American Express. Together, these four stocks make up nearly two-thirds of the fair value of Berkshire’s nearly $388 billion portfolio.
Charlie Munger used his platform on Saturday to speak out against bitcoin and cryptocurrency, which he compared to a “venereal disease” earlier this year.
Monday: ISM manufacturing spending on construction profits Foxconn and Clorox
Tuesday: Job Opportunity and Employment Turnover Survey (JOLTS); Factory orders Profits from Match Group, Starbucks, Lyft and Airbnb
Wednesday: ADP employment report; Federal Open Market Committee statement; Federal Reserve Chairman Jerome Powell’s press conference; Earnings from CVS, Dine Brands, Applebee’s, Yum Brands, and Uber
Thursday: weekly unemployment claims mortgage rates; Earnings from Budweiser APAC and Kellogg’s
Friday: April jobs report; Earnings from Under Armor and Draft Kings