Every week, new inflation data point one way or the other. However, if we focus on the so-called seven Cs of commodities, we see a trend towards persistent inflation. Seasonal commodities such as cattle and maize are showing signs of strengthening, while coffee, cocoa and crude oil remain stable after major fluctuations. This situation reflects the pressure on consumers to increase their spending on basic necessities, thereby cutting back on unnecessary spending. Shares in major companies such as Visa, MasterCard, Costco and Target are showing slight weakness, illustrating the pressure on commodities and the potential weakness in these consumer stocks, putting the Federal Reserve in a tricky position. If commodity prices rise, this could limit consumer spending at shops like Target, forcing them to spend more on food. Technology stocks have also come under pressure recently, indicating a correction after strong gains. The Federal Reserve finds itself in a complicated situation, with financial conditions that may require tightening, but it is constrained by the recent performance of financial markets and commodities. Gold, although not one of the seven C's, has reached record highs, but is not considered a reliable indicator of inflation due to the availability of other financial instruments to protect against inflation. In conclusion, faced with this dilemma, investors need to adjust their strategy according to their investment horizon, staying the course for long-term investors or rebalancing their portfolio for those who react more quickly to market conditions.
Bloomberg TV provided by MT Newswires
