Pricing Pressures, Inflation Indicators, and Crypto Concerns

Pricing pressures continue to plague manufacturers as supply chain issues persist and activity eases off highs, though the Richmond Fed Manufacturing Index remains firmly in growth territory. Economists continue to speculate about if/when these price increases will filter through to consumers, and currency developments have us wondering how much of that consumer base could be international. And as many investors chase top performers—often to their own detriment—inflation anxiety continues to make its presence felt in the markets, though it does appear to be easing somewhat. Are you aware of how different asset classes typically behave in varying inflationary environments? And as volatility continues in the crypto market amid talk of increased regulation out of China—Bitcoin climbed back above $40,000 after dramatic weekend losses—what regulatory approach are other major governments taking? 

A quick note before we get to the charts: there will be no new posts Friday or Monday in observance of Memorial Day, but we’ll be back on Wednesday 6/2. 

1. The regional Fed surveys, while off their pandemic-bounce highs, continue to indicate robust manufacturing activity:

Source: The Daily Shot, from 5/26/21

2. Costs of goods sold continue to rise due to pent-up demand and supply shortages. Will these price increases get passed through to consumers?

Source: The Daily Shot, from 5/26/21

3. Chinese currency strength should be helping with the trade deficit…

Source: The Daily Shot, from 5/26/21

4. Driving by using the rear-view mirror doesn’t make sense, why invest this way? Slow and steady can get investors to reach their goals…

Source: S&P Global Market Intelligence, from 5/26/21

5. Those worried about inflation have been investing accordingly:

Source: Deutsche Bank Research, from 5/25/21

6. Historic inflation and its effect on some major asset classes:

Source: Wall Street Journal, from 5/25/21

7. Interesting. As inflation fears grew, gold retreated. Now that inflation fears are subsiding, gold is rising again…

Source: The Daily Shot, from 5/26/21

8. While this data is as of May, it is a nice historical gauge. We note many commodity prices have retreated since…

Source: The Daily Shot, from 5/26/21

9. An update on how governments view crypto:

Source: BCA Research, from 5/25/21