Real estate has inflated wildly, but more due to emotion, FOMO and WFH than demand as a hedge against rising costs. Oil’s proven to be a far better bet as the world economy rekindles, and a decent way to gain exposure is through an ETF that owns the Toronto stock market – where commodity exposure is high. Gold has been a traditional inflation edge, but bullion pays neither interest nor dividends and has performed poorly during the entire pandemic. Put your pennies here in retirement? Fuggedaboutit. Many believe BTC will ultimately go to nothing and be the world’s biggest financial scam. But these assets are backed by nothing, are prone to fraud, essentially unregulated and immensely volatile. CB rate hikes are not expected to click in until the second half of next year.Ĭrypto and Bitcoin have been on a tear while the supply chain flounders and inflation rages.
So far it looks like Tiff will turn a blind eye to this. The ‘inflation protection’ baked into pensions, union contracts, CPP or OAS is a joke, based on the official estimates. But for working and mortgaged Canadians the desire is for exactly the opposite. In other words, should the BoC let inflation rage in order to assure more growth and jobs, or start chilling with rate hikes? If you’re retired and living on fixed income – like a DB pension or GICs – it’s a simple ask. The central bank’s mandate is being renewed this year and the T2 gang has to decide to up the inflation ceiling or leave it be (at 2%). At over 4% inflation is the highest in two decades and, in reality, the sting is far worse than that. The Bank of Canada’s cryptic boss, Tiff Macklem, has downplayed the surge, saying this is all ‘transitory.’ This week the head of RBC disagreed. Official inflation in the States is 5.4% and in Canada’s it’s at 4.2% – far above the Bank of Canada’s target rate of 1-3%.Įconomists here figure our CB will let inflation run hot since ruining the fortunes of retirees is less of a danger than crippling the post-Covid economic recovery. Prices are rising at the fastest clip in 26 years. Power shortages there cut factory production in 20 provinces last month. It’s bordering on being out of control.Īnd look at China. Energy is one of the biggest components of inflation. Electricity costs are going up, since these fuels (and coal) are used to make it. There’s an acute shortage of natural gas as the global recovery sucks off supplies. Gasoline prices have hit all-time highs in much of the country. Oil is over $80 a barrel and on its way to a hundred bucks, many believe. The implications for your finances, portfolio and retirement are growing more profound. So food will cost more, along with gasoline, natgas and everything made from oil. Lumber and golden retrievers may cost less than last year, but energy is surging. No phones.ĭemand is shifting back into services and prices are exploding there, too.
Apple just announced iPhone production will drop by ten million units. The car guys can’t get enough to make vehicles. Factories that had to close for a while because of Covid can’t keep up with demand. The amount we shoveled into restaurants, airlines, child care, haircuts and clothing stores plunged. The last 18 months brought serious nesting, home renos, new hot tubs, boxes of stuff from Amazon and Wayfair, furniture buys, electronics and (especially) laptops, computerized kitchen appliances and puppies. But when a virus hits and lockdowns happen, everything can change. In a normal world (remember that?) 70% of the economy is derived from spending on services.
0 kommentar(er)
