Are inflation or deflation assets better?


Michael Hartnett at BofA argues the inflation assets will continue to outperform over the long run:

The Price is Right: “Magnificent 7” up magnificent 24% YTD (Chart 3), contributing>50% of SPX return (NVDA alone=25%) as monopolistic mega tech monopolized performance; 3Cs of Crypto, China, Commodities also outperforming in ’24:bitcoin+60%, China +16%,gold+13%.; note commodities on course to be best-performing asset class 3 of past 4 years (Charts 5 & 6);biggest loser of’24 =30-year US Treasury(-6%).

Tale of the Tape: 2020s thus far: US national debt +50% (up $12tn),US nominal GDP+42% (up $9tn), US financial assets +38% (up $46tn–Wall St now 6 x size of Main St, Chart4), US Treasuries=48% of global government bond market, US credit & stocks>64% of respectiveglobal market caps….policy makers (and investors) know US “too big to fail,” set policy knowing recession more consequential than inflation.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.