Why it is mistaken to check at the moment’s inflation surge to 1970s-style ‘stagflation’

Investors could learn the wrong lessons from the 1970s.

It’s hardly a fond memory, but rising prices in the US and other countries this year have investors and experts looking to repeat the “stagflation” of the 1970s – a demoralizing combination of stagnant economic growth and high inflation. The comparisons are understandable but superficial and offer little insight into what is actually going on beneath the surface, said Jean Boivin, head of the BlackRock Investment Institute, in a telephone interview.

Why is it understandable? “We haven’t seen an environment since the 1970s in which inflation was mainly driven by supply shocks,” said Boivin, a former deputy governor of the Bank of Canada. But that is where the comparisons largely end.

Inflation in the 1970s was exacerbated by oil embargoes, which drove up energy prices, slowed the economy and fueled inflation. In the current case, the supply shocks are largely the result of a surge in demand tied to restarting the global economy after the COVID-19 shutdown. That’s an important difference.

Mirror opposites

In fact, the 1970s and the current situation are contradictory in many ways, Boivin said. Stagflation came half a century ago when growth and activity exceeded the productive capacity of the world economy. Now the economy is running into supply chain bottlenecks, which is not the same. In fact, the economy is still operating below its production capacity, he said.

That means that supply will eventually increase to meet demand, he said rather than the 1970s experience that demand will decrease to meet supply.

And while both episodes share rising oil prices, the story in the 1970s was one where producers’ shutdowns of oil supplies slowed the economy and undermined their operating capacity. Energy prices are rising now because the economy is up again, “and without energy there is no way,” Boivin said. “The causality runs in the other direction.”

“Inflationary boom”

Other economists have made similar statements.

“To be in stagflation, the economy has to be stagnant by definition, and the evidence for that is pretty thin,” said Neil Dutta, head of US economics at Renaissance Macro Research, in an October 18 release. “According to all information, the economy remains firmly in boom mode.”

To identify signs of stagflation, Dutta used the indexes for incoming orders and prices paid by the Institute for Supply Management.

On one axis, he placed new orders that act as a proxy for the demand side of the equation or how many customers buy. On the other hand, it represented the prices paid as a proxy for inflation (see table below).

Macro Research of the Renaissance

In order for the economy to stagnate, orders need to be below their long-term average – reflecting weak customer demand – and prices need to be paid
above its long-term average – which means inflation is high, Dutta explained. Instead, as the red dots for the 2021 monthly readings show, the economy is in an “inflation boom,” he said, with strong orders and strong prices.

And then there is the job market. Indeed, part of what drove the “stag” into stagflation in the 1970s was the high unemployment that came with rising prices.

“At 4.8% today, the unemployment rate is below its 5, 10, 15, 20, 25-year averages (and so on; you get the picture),” wrote Ross Mayfield, investment strategy analyst at Baird , in a Monday note.

“While the economy still has a few million jobs removed from the pre-COVID era, the number of job vacancies is at record levels and churn rates are skyrocketing,” he said.

Political mistake ahead?

That doesn’t mean inflation is not an issue. And rising inflation expectations, a key metric monitored by central bankers, could become a problem. Boivin fears that some policymakers will react too quickly and aggressively to increases in inflation for which monetary policy is not prepared.

That would risk unnecessarily destroying demand if bottlenecks were to resolve themselves and supply should come back, said the former monetary politician. After all, tightening monetary policy would do little to decongest the port or remedy the semiconductor shortage that has messed up supply chains.

Traders have brought forward expectations for rate hikes, fueling fears that central banks, including the Federal Reserve, will step on the brakes more aggressively than previously expected, risking an economic downturn.

See: The Federal Reserve’s next cycle of rate hikes is imminent, but it may not look like officials forecast

High profile investors, including hedge fund titans Paul Tudor Jones and David Einhorn, have argued that Fed policymakers are more inflation creators than inflation fighters. And Jack Dorsey, CEO of Twitter Inc.
TWTR, + 0.32%
and Square Inc.
Sqm, + 2.20%
late Friday warned that “hyperinflation” was coming to the US and the global economy.

Read: Cathie Wood says Jack Dorsey’s “hyperinflation” call is wrong

Major stock market indices continued to rise as inflation worries mounted. The S&P 500
SPX, + 0.64%
and Dow Jones Industrial Average
DJIA, + 0.34%
both ended on Monday at record highs, with the S&P 500 up more than 21% so far in 2021 and blue-chip value up nearly 17%.

Not a bond-friendly environment

How long will inflationary pressures last? Anyone making projections should do so with great humility, given the largely unprecedented nature of the post-pandemic restart, Boivin said upfront, saying it was reasonable to expect high inflation into the first half and perhaps into the second half of the year 2022 continues.

It is more important to understand the “nature” of the current rise in inflation than the time frame. Inflation is likely to stay well above target in 2022 and above target on average for the next five years, Boivin said.

This is not a bond-friendly environment for investors, he said, as the BlackRock Investment Institute favors inflation-linked securities over nominal bonds. However, it is not an “automatically” bad environment for stocks or other risk assets “which makes us underweight net-net government bonds but overweight global stocks” as investors see some inflation with a subdued political response.

Dow, S&P 500 fears? Worrying a few correction is flawed approach to make investments

the Dow Jones industry average and S&P 500 index just suffered five consecutive days of losses and her worst weekly performance since – wait for it – June. Investors moved into the summer to ease their stocks a bit and ended the summer on a similar sell-off. Is there more in there? Is the big one – that the stock market correction bears have been waiting for – to finally fall?

Many of the main factors cited for a potential sell-off are known to investors, which means it is harder to see at this point how they would trigger a correction at that point. There is the Delta variant. There is the Rejuvenation of the Federal Reserve and a change in central bank policy amid a sudden slowdown in employment and economic growth. There’s the latest political headline – new scramble in Washington DC on a corporation tax increase and a possible share buyback tax to fund President Biden’s spending plan.

And there’s the problem that stock has left behind with every new record during this bull market (and the bull that preceded or, depending on your view, was interrupted by the pandemic): stock valuations are high.

There are also short-term pressures to consider: the “seasonal choppiness” of autumn that market strategists believe is real, and the most recent US stock market downgrades by major Wall Street bankswhich could keep the pressure on the stocks, especially with so much money coming into the market from retail investors lately. But it’s always more likely that something investors don’t see coming (like a pandemic) will cause a historic sell-off than anything investors already know.

That makes technical market indicators and the historical performance of the S&P 500 a reasonable way to gauge whether investor confidence will survive the final round of selling.

Johannes Eisele | AFP | Getty Images

For Keith Lerner, co-chief investment officer and chief market strategist at Truist, the history of the S&P 500 suggests that the bull market is not over yet, even if profits are modest.

Since 1950, there have been 14 years in which the market rose more than 15% through August. By the end of the year, stocks had gained an average of another 4%, rising in 12 of the 14 cases.

Sales of shares are to be expected

Setbacks are to be expected. The largest pullback in 2021 was around 4%. This is not typical, according to Lerner’s review of the data. The only two years in the historical record that the S&P 500 didn’t see at least a 5% decline were in 1995 and 2017. And history goes that rapid gains must slow down. In his customer research, Lerner finds that the current bull market has increased 102% in 1.4 years, compared to the average bull market gain of 179% in 5.8 years since 1950.

But from what Lerner calls the “evidential approach” in the technical indicators and macro contexts, the message for investors – not traders looking for any short-term move – is that US stocks will still be for the next six years can rise up to 12 months.

Last week’s losing streak is, in his view, one of the strongest starts to the year in several decades, no cause for concern. Often times, when the market is moving, the automatic reaction is to end up going negative, but Lerner says investors shouldn’t be afraid of strength as long as it is supported by fundamentals. “A trend in motion is more likely to stay in motion,” he said. “The carousel of worries keeps spinning, and when one concern recedes, another emerges to take its place. There is always something to worry about … there can always be something that we don’t talk about today that can knock us aside. ”

Even if the Black Swan event doesn’t happen, that doesn’t mean there won’t be 3% to 5% corrections. “That’s the price of entry to the market,” said Lerner.

That doesn’t mean investors should never take tactical steps, but he does say that it is better for the majority of investors to focus on the next big step in the longer term than the next step the traders take.

A slowdown in economic growth is not growth

The economy may lag behind the rosiest of expectations for the Roaring 20s, but Lerner’s focus is the fact that slower expansion is still not a recession, and stocks rise 85% of the time during times of economic expansion. Stocks are highly valued, but he noted the S&P 500’s price-to-earnings ratio hasn’t hit new highs this year, despite the overall market.

“Valuations are still high, so we don’t expect strong price-earnings expansion and then earnings growth so stocks can’t grow at the same pace.” However, he added that analysts underestimated earnings power overall after the pandemic crashed.

This is what happens after recessions, it happened after 2009, he said: estimates are trimmed too far and corporate profits come back faster than expected as companies cut costs and focus on efficiency. If the economy is still fragile now, it is amid a strong rebound from lows and GDP that are driving more sales and more of those sales flowing into the bottom line. “And that’s why we have record corporate profits,” said Lerner.

One of the factors that should worry investors is the slowdown in growth. After being positive for over a year, Economic surprise index turned negative. “And deeply negative,” said Lerner. This is an indication that after a year where investors and economists underestimated strength and the numbers beat estimates, now with Covid concerns and an economic slowdown, the data was surprisingly on the downside.

But that’s not a red alert. “It just means, from our point of view, that things have caught up with expectations. But that’s a slowdown. We’re seeing a climax, but it will stabilize,” said Lerner.

Exceeding peak growth does not mean weak growth, and relative opportunities in the market remain a bigger focus than the cheapest asset. “There is no such thing as the ‘cheapest facility’ today,” he said.

The technology-oriented S&P 500 has internal problems

He sees relative opportunities within the S&P 500. The S&P 500 overall wasn’t as strong as its highly weighted tech stocks in the final leg up to the recent highs. The S&P 500 Equal Weight Index is up less than 3% since last May as mega-cap tech stocks took the lead. That was a reversal from early 2021 when inflation trading caused the cyclicals to outperform the mega-caps. And it means that stock prices have undergone major corrections as the stock market set new records.

The money hasn’t left the market that much, but has flowed back into the huge balance sheet, cash flow cows in technology that can continue to perform even in a slower economy. This is a sign that investors have become a bit more defensive even within the S&P 500. But it also means that returns in the S&P 500 can expand if the current carousel of worries doesn’t lead to a sustained negative turn in stock sentiment, known as Lerner.

“Internal rotation is healthy,” he said. “We’d rely a little on a balance between the two. It is not so clear that investors should be exclusively cyclical or growth oriented. … Expectations have been severely set back, so a little good news can go a long way. “

The earnings growth rate is likely to peak soon, and Lerner says the next year will have much more difficult earnings calculations than after a pandemic-induced economic downturn. But peak earnings growth is not the same as peak earnings. “The trajectory is higher,” he said. And instead of trying to name spike profits, he continues to focus on whether or not the earnings estimate revisions may turn negative and sees no symptom or pattern in this market.

“If we have earnings growth that is peaking and at a peak in Fed accommodation and we cannot achieve a better fiscal environment, it all indicates that the trend is higher, but with moderation, and that turns into volatility and some bigger wins and opportunities. “Below the surface instead of the headline index.”

That might be a gut check for investors driving the market as a whole higher, and this is evidence of the sales that took place last week, but Lerner advises every investor to remember what famous Fidelity Magellan Fund manager Peter Lynch was saying once said: “Investors who tried to anticipate corrections have lost far more money than they have lost in the corrections themselves.”

‘Politicians are incorrect’ accountable forecasters for inaccurate predictions of Ida’s threats: ex-meteorologist

Gary Szatkowski, who was a leading federal forecaster in New Jersey during Hurricane Sandy, called on New York politicians for claiming that forecasters were unable to determine the times and intensity of the Ida‘s threats.

“The politicians are wrong,” said Szatkowski in an interview with CNBC on Friday evening “The news with Shepard Smith.” “There have been a lot of warnings, there have been a lot of predictions, a lot of warnings about Ida when it came into the region with the potential for heavy rain.”

At least 13 people in the The New York City area was killed when the remains of Hurricane Ida hit the city with record rains and floods. New York Mayor Bill de Blasio repeated Friday that city officials had no idea what was going to happen in New York on Wednesday night.

“Here’s what we didn’t know we would have literally shocking and unprecedented rainfall,” de Blasio said during a media availability. “We had an hour-long period on Wednesday night that set the all-time record for a single hour in history, the recorded history of New York City, and no one expected that.”

Szatkowski pointed out accurate predictions by meteorologists and weather experts before the storm for dangerous, even fatal rainfall in the New York area.

He also noted that New York officials could simply “look west” to see what was happening and issue warnings to residents hours before the rain hit the city.

“There was flash floods, torrential rains, water rescues first in Pennsylvania, then in Philadelphia itself, and then in New Jersey, and then it came to New York City, and there are hours and hours you could watch this come to New York City and be prepared and know what will happen, “said Szatkowski, a former National Weather Service meteorologist.

Mayor de Blasio’s office did not immediately respond to CNBC’s request for comment

ON THE MONEY: Your credit score report could also be unsuitable; right here’s what to do about it | Enterprise

Consumers filed a record number of complaints with the Consumer Financial Protection Bureau in 2020, according to a report released Monday by the U.S. Public Interest Research Group, a nonprofit consumer protection group. Credit reporting issues were cited in 282,000, or 63% of the complaints. The majority noted “incorrect information” in credit reports or “information belongs to someone else,” the report said.

Not only did complaints about credit reporting errors top the list of consumer complaints, but the three major credit bureaus – Experian, TransUnion and Equifax – were the top three companies complained about.

Mistakes can put your score at risk

Accuracy is important as any errors in your credit report can indicate identity theft or fraudulent activity on your accounts. And since credit report data is the raw material for credit scores, mistakes can lower your score.

Part of the volume of complaints may be an unintended consequence of payment arrangements mandated in the 2020 coronavirus relief bill and temporary concessions offered by lenders and credit card companies.

But credit reporting errors were common even before the pandemic, says Ed Mierzwinski, senior director of the Federal Consumer Program advocacy and author of the report. Payment adjustments could have resulted in more people checking their credit reports and finding these errors, he says.

Mierzwinski recommends “every consumer with any credit account” to check their credit reports. People who have common names could be at particular risk of confusion, he says.


You can get a free credit report from any of the three major credit bureaus by using AnnualCreditReport.com. You will be asked to provide personal identification information – your name, social security number, date of birth and address.

You will also be asked security questions to verify your identity. Some of these can be tough. If you can’t answer correctly, give me a call 877-322-8228 to request your credit reports by mail.

You can also download an application form and mail it to: Annual Credit Report Request Service, PO Box 105281, Atlanta, GA 30348-5281.


Your reports from the three offices don’t look exactly the same. Not every believer reports to all three and the offices present information in various formats. However, you can use a similar process to read your credit reports.

First, check your identification data. Mistakes like spelling mistakes made by a previous employer don’t matter, but something like an address you’ve never lived at could indicate identity theft.

Next, check the account information. Every credit account you have (and some that are closed) should be listed and include:

– Name, account number and opening date of the obligee.

– type of account (credit card, loan, etc.).

– Account status and whether you are up to date with payments. Accounts that were in good standing at the beginning of the pandemic-related payment accommodation must continue to be reported in this way until the end of the accommodation.

– Whether you are a joint account holder, primary user or authorized user.

– Credit limit and / or the original amount of a loan.

– There may be negative information, such as: B. Collection accounts or bankruptcy documents. Make sure you recognize it and that it is correct.


The Fair Credit Reporting Act holds both the creditor reporting to the credit reporting agencies and the credit reporting agencies responsible for ensuring that the information in your credit reports is accurate.

If you find a mistake on one credit report, check the other two. Deny the bug with any bureau that reports it. You can dispute by mail, phone, or online – the credit report has information on how to submit your dispute. Credit bureaus need to investigate the result and let you know.

You can also contact the company with the wrong information. It must notify the bureaus of the dispute and, if it finds that the information is incorrect or incomplete, ask the credit bureaus to delete it.

If disputes cannot resolve the issue, Mierzwinski recommends filing a complaint with the CFPB and requesting an investigation. That can put additional pressure on correcting misinformation, he says.

Acting director of the CFPB, Dave Uejio, said one of its goals is “to ensure that consumers who file complaints with us get the response and relief they deserve”.

Hartford Man Urges Warning With Fee App After Cash Reaches Mistaken Person – NBC Connecticut

More people than ever are picking up their phones to make payments. And with the coronavirus crisis, more money is changing hands at a social distance thanks to money transfer apps. But one Hartford man has a warning because hundreds of his hard-earned dollars didn’t make it into the right hands.

“I mean, I was a huge Cash App fan,” said Eric Crawford, who currently runs a family resource center in Hartford.

The former member of the State Board of Pardons and Paroles joined NBC CT Responds after experiencing a problem with the money transfer app.

“$ 500 for anyone is a decent amount of money, but it didn’t change my life, but life would have changed for someone in my community.”

Crawford said he sent a $ 450 payment to his son Kevin’s fitness trainer earlier this year through the Cash app, a payment he’d made periodically to Kevin through that app.

“The coach calls me and says, ‘Eric, you didn’t pay the money for your son.” And I said, “Yeah, I did.”

Crawford said after checking his Cash App account history, he found that the Kevin who received the payment wasn’t the same Kevin he was in his phone contacts.

“No phone number, nothing, it was just like someone immediately put some kind of fake Kevin on the screen to throw you off,” Crawford said.

Crawford contacted Cash App customer service via email but said that after investigating his account history, he closed the case for authorizing the transaction.

Even though the money was withdrawn from his bank account, the payment appears to be pending in the app to this day.

“Where’s the money? He never got it. There’s no email confirmation that I even sent it to the wrong person,” Crawford said.

NBC Connecticut can’t confirm if the other Kevin ever received the money, what that person’s intentions were, or if it was a user error, but Crawford firmly believes it wasn’t his fault.

The Cash app says that if a customer sends money to someone they think isn’t on their contact list, they’ll send a double prompt to make sure they want to send money to the account.

Crawford says it didn’t and his transaction didn’t trigger the typical email notification he usually receives when making a payment.
Cash App will not comment on individual cases, but emails to Crawford suggested that their account should continue to be secured.

In a statement, a Cash App spokesperson said: “Fraud prevention is critical to Cash App. We continue to invest in and strengthen anti-fraud resources by both adding staff and introducing new technology. We are constantly improving systems and controls to prevent, detect and report bad activity on the platform. “

The Attorney General and the Ministry of Consumer Protection warn that there are risks associated with using online payment apps.

“Remember, when you sign up for a credit card or bank account, there is usually adequate protection for those products that you are paying for, by the way,” said Connecticut Attorney General William Tong.

He says there’s a reason this app and others like Venmo and PayPal have minimal fees.

“When you sign up for something that’s faster, cheaper, easier, everything is faster, cheaper, easier.”

And with that, says Tong, you can’t expect great customer service either.
Tong’s office says they have received eight complaints about Cash App since this summer.

“We’re definitely looking into it and I’m talking to other states about it because even if it’s not illegal it doesn’t make it right, but at the end of the day you’re the downside of that with something that’s an online app. It’s not a bank. It’s not a credit card company, ”said Tong.

He and the state consumer protection ministry urge users of these apps to be careful.

“When you make payments through an app, the entire responsibility rests with you,” said DCP Deputy Commissioner Arunan Aulampalam.

They say double and triple check whoever you’re sending money, including all of the username details.

DCP also warns against sending money to people you do not know.

“Make sure you double-check wherever you’re sending the money, as the same way it will give an envelope to someone you don’t know. You are literally passing money on to someone else, and once that money is out of your hands, it’s a lot harder to get back. “

In addition, it is important to use passwords that are as secure as possible and two-factor identification whenever possible.

Crawford says his bank fortunately made up for his loss, but he hopes telling his story will educate the community and help make changes with these apps in the future.
If he had known what he knows now, he would never have used a money transfer app.

“This is our hard earned money. We already have this pandemic and everything else is underway, ”he said.

From now on, he’s going to pay Kevin the old-fashioned way.

“I’m going back to the old checks and paying cash. I think that’s the safest thing to do. “

Cash App will notify NBC Connecticut that if you believe you may have been a victim of fraud you should contact NBC Connecticut through App Support or their website. They say the Cash app never asks customers to send them money. Additionally, they said they will never request a customer’s PIN or login code outside of the app.

HQGE’s Huge M Leisure Photos Provides New Characteristic Movie “Improper for Proper” to Its Slate of Upcoming Productions

Los Angeles, CA, January 27, 2021 (GLOBE NEWSWIRE) – via NewMediaWire – HQ Global Education, Inc. (OTC: HQGE) announced today that wholly owned subsidiary Big M Entertainment Pictures (BMEP) has added a new feature film to its already crowded list of projects in various stages of production.

The company’s most recent announced project, Wrong for Right, is a full-length feature film written and produced by HQGE and BMEP President Marvin Williams. “Brian Carroll and Jaime Ohlsen are executive producers. “Wrong for Right” is a modern day action / drama moral story that involves a group of police officers battling personal demons and legal morals as they attempt to navigate the city streets while they are after Seek justice. The film, which has been fully funded, will soon be scripted and shot in the LA area. Completion is planned for the end of 2021 or the first quarter of 2022.

In connection with the announcement, Mr. Williams stated, “We are delighted and feel very fortunate to have completed each volume of production or post production in a unique time that has influenced so many. We too had to make numerous adjustments to shooting schedules and production activities to respond to the problems caused by the virus and the economy, and we feel encouraged that despite these difficulties, we have been able to bring two of our films closer together and remain confident that the remaining ones Months of 2021 will be challenging, but we will continue to push the production process forward when the environment for film production arises. “


HQ Global Education, Inc. is the parent company of Big M Entertainment Pictures, Inc., a full-service film and TV production company in the heart of Los Angeles. The company was founded by Marvin Williams, who brings over fifteen years of experience working on music, film and television projects that span a wide range of budgets and areas. Led by Mr. Williams and an experienced team of Hollywood veterans, Big M Entertainment draws on its broad and talented base of writers, producers, directors, editors, and technicians to provide a comprehensive service at every stage of film and television content and support to provide creation, including concept development, writing, editing, cinematography, visual effects, and post production. The company is also an industry pioneer in the rapidly growing areas of online content creation and microbudget movie creation, and is currently working on a number of projects specifically for simultaneous or integrated release in both theaters and for display at home or on personal devices.

The story goes on

Big M Entertainment’s 2021 project program includes two eco-friendly documentaries: TREES (awaiting distribution) and DISTANCE (pre-production); Seven feature films: CAPTURED (post-production), THE VACATION (in development), LIVE (pre-production), ROSAMOND (pre-production), WRONG FOR RIGHT (pre-production), AVENUE M (fully scripted) and TRAILER (fully scripted) as well as two new TV series, WOW (Working title reality series, preproduction) and MSB (working title script series, preproduction).

For more information, see https://hqgeinc.com, https://www.bigmentertainment.com, https://www.youtube.com/watch?v=0-Tm4HRgSgg, https://www.bigmentertainment.com/BIGM_HTS/index_agent.php

Safe Harbor Statement: This press release may contain certain forward-looking statements and information as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. and is subject to the Safe Harbor created by these Sections. This material contains statements about expected future events and / or financial results that are forward-looking in nature and, as such, are subject to risks and uncertainties.

Daniel Gallardo Wagner, managing director