Inflation Is Coming.
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Market On Open, Thursday 20 March
by Alex King, CEO, Cestrian Capital Research, Inc.
Inflation is coming.
How can it not be? Prices of fuel and fertilizer are set to keep rising, and quantities delivered set to keep falling. If the war ends soon then the inflationary impulse will be, dare I say it, “transitory”; if it keeps raging then the inflation will be structural and more so will itself keep rising.
I truly don’t know how this gets dealt with in the market. Inflation would naturally mean the Fed would raise rates, but inflation with lack of supply of fuel and food means reduced economic activity which means cutting rates to stimulate activity. You see what I mean.
The market has one material hump to get over this week, being quarterly opex tomorrow. Until maybe the close of Monday we can explain away lack of direction as an FOMC or an opex artifact. Thereafter the true picture should reveal itself.
When the bear market comes, by the way - be that next week, next month, next year, I don’t know when - you will probably thank yourself for having signed up for our SignalFlow Long/Short service. This simple to use service is having a good run; returns since 1 January 2025 have delivered a CAGR of 14% vs 11% for buy-and-hold SPY, and one can sleep easy with this algo in the knowledge that it enables you to be making money whether the market is pointing up or down. (It has been short SPY since 3rd March by the way).
You can read more about it here. Reach out to us at minerva@cestriancapital.com if you have any questions about the service.
Alex King
Let’s dig into the market at large.