Gerard Minack exclusive: US to lead cycle, inflation to boom

Exclusively from Gerard Minack’s Downunder Daily:

Inflation corrodes most asset values.  It’s harder for investors to protect themselves against high inflation than against deep recession.  Investors in developed markets haven’t had to worry about inflation risk for several decades, but now that risk is rising.  This note looks at what investments have succeeded in previous periods of high inflation.

Inflation has rarely been a concern for investors in developed markets over the past 30 years.  But aggressive fiscal stimulus, backstopped by central banks, is increasing the risk that inflation rises to uncomfortable levels for investors.  History suggests that there are fewer places to hide in a high-inflation environment than there is in recession.  This note draws heavily on recent research The Best Strategies for Inflationary Times, by Henry Neville, Teun Draaisma, Ben Funnell, Campbell Harvey & Otto Van Hemert.  (All the authors are associated with MAN Group.  Ben & Teun are old colleagues of mine.  The full report, available here, has more detail than I will use now.)

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