George Gammon: Interview: Hedge Fund Manager Reveals Secrets You’ll Never Hear on CNBC
While the mainstream view is that the economy is faring well, as evidenced by the stock market near all-time highs, there are other views.
One view is that the world is getting into a war footing. That view looks at the money being spent around the world, particularly in the Russia/Ukraine conflict. Under that view, growth may not be as strong, as resources are going to the war effort rather than on private-sector spending.
Another view is that we are in a stagflation environment. That’s a world where wages and the economy grow slowly, but inflation remains stubbornly high. The past three months of sticky inflation data would support the idea of at least some stagflation.
That’s also not a growth environment, or one conducive to stock market returns. The last stagflation of the 1970s saw massive inflation and a bear market combine. The result was the worst real performance for stocks since the 1930s.
For now, the market may not be pricing in further supply shocks. Global commodities could be cut off from global conflicts. That could lead to skyrocketing costs. When commodities can no longer be moved quickly or cheaply, other changes such as monetary policy is irrelevant.
Investors may want to consider commodity-related investments as a hedge against the dangers of both stagflation and global conflict.