Stocks in danger zone because ‘inflation has changed its stripes,’ market watcher Jim Paulsen warns
“‘You’re seeing more and more evidence that inflation has changed its stripes and is headed higher,” [Leuthold Group’s] Jim Paulsen said Wednesday on CNBC’s ‘Trading Nation.’ ‘What we’re doing, as a result, is being forced to readjust interest rates and ultimately price-earnings multiples in stocks.'”
MK note: Historically the problem with inflation is that it can appear suddenly and once the genie is out of the bottle, it is very difficult to get it back in. History is replete with examples of central banks that thought they could keep inflation within designated boundaries, only to find that like wild fire it can rage out of control – Argentina suddenly at a 26% inflation rate (and quickly going higher) being a prime example. Venezuela, an extreme case, is running an inflation rate of 13,379%.
The Fed might someday find itself, if Paulsen is right, admitting that it should have been careful what it wished for. . . . . .Some judicious hedging with the right assets (gold and silver) ahead of that sudden appearance might do wonders for the average portfolio.