Some inflation is good. Not too much, but some. As they say, one person's cost increase is another person's profit.
That's why, historically, stocks typically perform well in inflationary environments.
Of course, with inflation just hitting a 40-year high, it's already reached the 'too much' point.
But remember, inflation doesn't tank stocks. High interest rates do.
And while the Fed is expected to raise rates 3-4 times this year, getting to 0.9% by year's end, that would still keep rates at historically low levels.
It's also important to know that over the last 50 years, there's never been a recession (aside from 2020's pandemic-induced plunge), when the Fed Funds rate was under 4%.
And with rates only expected to hit 0.9% by the end of this year, 1.6% by the end of 2023, and 2.1% by the end of 2024, that's a far cry from that 4% level.
So the prospect of 'high' interest rates is literally years and years and years down the road.
And to me, that shows a clear path for strong economic growth for the foreseeable future.
-- Kevin Matras, Weekend Wisdom, February 19, 2022
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