Stock markets stumble on inflation! – EconomyMorning

“Sell in may and go away” says the well-known stock market proverb, which can be translated in French as “sell in May and go away” from the markets and the stock exchange.

The idea is to come back to the month of October, since traditionally, the months of May, June, July, August and September have performed poorly or even slightly bearish.

This is rather true when we look at the historical performance of the markets over long durations as you can see on this chart from 1970 to 2020 which gives a sufficient statistical retreat.

So will he have to sell his shares?

If you’re like me, it’s been a long time and even a year since you sold them, which also allowed me to stay safe from the easy money that missed the rebound of the year 2020/2021 after the plunge in the markets of March 2020 linked to Covid-19. If you see self-mockery in my words, then you are right, and there is no regrets on my part and for several reasons. First of all, the money easily earned on the stock market is not the most glorious even if I obviously do not spit on it, but by wanting to win too much or make blows, we forget the heritage approach. However, my job is to enlighten you and fuel your reflections in order to have a secure and not flamboyant heritage strategy! So this is not speculation. When we enter a market that we do not understand, or that we no longer understand, we speculate. We do not manage our heritage. Over time, all of this will average out and losing a little performance is not a big deal, because it is always a question of the risk / benefit ratio. Once the rebound was largely underway, it was irrelevant to re-enter the markets.

Now what will happen?

Very hard to tell you all.

The markets fell quite significantly yesterday (it’s not at all a crash for the moment) because of fears linked to the possible (probable) return of inflation and therefore the risk of rising rates.

This is what Boursorama source reported here at the close of markets last night.

“Investors are worried about the acceleration of inflation while the world economy is in the midst of a recovery phase, benefiting from the success of vaccination campaigns and budgetary and fiscal support from States. To the point that it faces shortages (semiconductors) and soaring commodity prices. Copper, palladium, corn, timber and soybeans have set records or are close to doing so.

In the wake of commodity prices, producer prices rose 6.8% in April in China year on year, their strongest increase in three and a half years. In this context, US inflation for April will be the center of attention tomorrow. Higher-than-expected figures would support speculation that the Fed’s ultra-accommodative monetary policy will tighten faster than expected.

Which would be bad news, especially for tech stocks whose high valuations are sensitive to interest rates. “

Inflation is obvious. We will not cut it!

Inflation is obvious, and we will not cut it.

You will visualize it globally from the month of September.

For the moment you are rather seeing shortages and major supply problems.

Upstream, among “professionals”, price increases are now commonplace, but it takes time for all of this to be gradually transmitted to the entire economic chain.

There will therefore be inflation from September 2021 and this will be sensitive, palpable. You will see it and feel it.

But the real question is whether this inflation will be sustainable or not!

Sacred question, isn’t it?

Incidentally, what form will this inflation take? Hyperinflation? Stagflation. Simple inflation? There are many assumptions and some hellish potential impacts.

This is the reason why I am putting together a special file for the month of May, devoted to inflation to guide your strategies for the coming months, because inflation will be THE subject of the start of the 2021 school year.

Stay tuned.

It is already too late, but all is not lost. Prepare yourselves !