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Central Markets by Robert Lloyd, CFA

The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the  information cannot be guaranteed. All opinions and outlooks are subject to change.

  • Writer's pictureRobert Lloyd, CFA

Contrary to our collective memory, inflation was not stable during the 1970s.

From 1962, inflation rose from a fairly stable 2% to a peak of 6% in 1969. That rise triggered the Fed tightening cycle that caused the 1970 recession. Inflation fell as it usually does during recessions but came back with a vengeance in 1974. Inflation rose quickly in from 3% in late 1972 to 12% in 1974. In total, there were 3 massive waves of inflation during the 1970s, 3 Fed tightening cycles, 3 recessions and 3 major bear markets.

Is it possible the Fed will replay this script over the next few years? Yes, because the enabling behaviors are the same:

1. Reluctance to hurt economic growth by raising rates to high.

2. Assuming supply chain and not monetary policy created current problems.

3. Relative stability of long-term Treasury yields encourages only moderate tightening of policy early in the inflation cycle.

I hope I'm wrong because this conclusion means several hard years ahead for our country.

On a more mundane level, have you thought about what this means for your portfolio strategy? We have. Call us to discuss your situation and our view.

Chief Investment Officer

Lloyds Intrepid Wealth Management

Lloyds Intrepid LLC is doing business as Lloyds Intrepid Wealth Management. Lloyds Intrepid LLC offers investment advisory services in the State of Texas where registered and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Lloyds Intrepid LLC and its advisers do not provide legal, tax or accounting advice. Lloyds Intrepid LLC formulates retirement plans, investment strategies, portfolio construction and investment due diligence for clients with signed investment advisory agreements with us. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. All opinions and outlooks are subject to change.

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