This week we discuss whether this is a bear market rally or a new bull market. This is the key to the markets next move.
We also discuss whether Inflation is cyclical or structural. Zoltan Pozsar from Credit Swiss has a good take on this. Here are a few key quotes from his recent market research. The last one is very important.
“The low inflation world stood on three pillars: first, cheap immigrant labor keeping service sector wages stagnant in the US; second, cheap goods from China raising living standards amid stagnant wages; third, cheap Russian gas powering German industry and the EU more broadly."
“Central banks went from waging a war against deflationary impulses coming from the globalization of cheap resources (labor, goods and commodities) to ‘cleaning up’ the inflationary impulses coming from a complex economic war."
“Think of the economic war between the US, China, and Russia as something that will weaken the pillars of the globalized, low inflation world described above – the process will be slow, not sudden, but it will be certain, where ongoing economic ‘tits’ for ‘tats’ will have the potential to drive more and more inflation."
“ The unfolding economic war between great powers is stochastic and not linear, and what inflation will do in the future depends not only on the shocks that occurred in the recent past, but also on the many shocks that can happen still. These include more sanctions and the further weaponization of commodities, and more technology sanctions and further supply chain issues for cheap goods."
“Getting right where inflation goes from here is basically a matter of perspective; do you see inflation as cyclical (a messy re-opening after COVID, exacerbated by excessive stimulus) or structural (a messy transition to a multipolar world order, where two great powers are challenging the might and hegemony of the US). If the former, inflation has peaked. If the latter, inflation has barely started.”
“Getting right where inflation goes from here is basically a matter of perspective; do you see inflation as cyclical (a messy re-opening after COVID, exacerbated by excessive stimulus) or structural (a messy transition to a multipolar world order, where two great powers are challenging the might and hegemony of the US). If the former, inflation has peaked. If the latter, inflation has barely started.” - Zoltan Pozsar
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Today's Guest: Kirk Chisholm
Kirk Chisholm is a Wealth Manager and Principal at Innovative Advisory Group, an independent Registered Investment Advisor located in Lexington, MA. He has been providing wealth management services to individuals, executives, entrepreneurs, and their families since 1999. He is an outside the box thinker, risk manager, inflation expert, blogger, podcaster, and all-around interesting guy. Kirk is dedicated to developing lasting relationships with all of his clients and their families. One of the benefits of working with Kirk is his patience, empathy, and his ability to provide clear and easy-to-understand explanations to complex financial topics.
Kirk developed a unique philosophy for the wealth management industry called Risk Management First. The medical field has a similar way of thinking of “first do no harm”. This philosophy focuses on risk management for clients in all aspects of their lives in ways the industry does not address. Risk management does not stop with investments. It also requires working closely with other professionals to address areas of their financial lives not currently being met.
In 2008, Kirk co-founded Innovative Advisory Group to address the needs not being addressed by the wealth management industry. It started with specializing in alternative assets held in retirement accounts (i.e. self directed IRAs/401ks). Then the company expanded into the specialization of college funding (i.e. planning, strategy, and paying the least possible for a high quality education), Risk Management First, exit planning for business owners, advanced planning (estate, tax, etc), and providing practice management and leadership training to other financial advisors, accountants and attorneys.
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