The greatest risk to investors turning to be the one that’s ‘least possible’


The greatest threat to investors now is not confusion in Washington, geopolitical uncertainty abroad or central banks’ settlements, but something that may seem much easier on the surface: inflation.

In addition, the risk of inflation ticking up is one of the “least possible” dangers now, according to the latest article from Scott Clemons, chief property strategist at Brown Brothers Harriman. At least for now, price squeeze in the economy continues favourable, although the Federal Reserve is going to appropriate inflation with its drive to hike rates.

“Nobody is interested, nobody cares, and nobody seems to be worried about the threat of rising prices,” Clemons addressed, evoking a market adage that the least likely risk is essentially the most critical.

In a measure frequently viewed as the Fed’s favoured measure of inflation, data issued this week revealed the core personal consumption expenditures (PCE) index that omit food and energy rose a mere 0.1 percent in June, after a comparable rendering the month prior. U.S. consumer spending, too, barely stirred in June.

In another dimension of inflation, the Consumer Price Index was consistent in its most current reading versus the increase of 0.2 percent anticipated.

In a rather non-scientific test of investors’ interest in increasing prices, Clemons said that the regularity with which people are rummaging for “inflation,” “cost of living,” and “Consumer Price Index” on Google topped in previous years and appeared to be dropping.

He added that it is a probability that inflationary tensions investors typically see during a business development haven’t yet cropped up. Since the edge of the ‘Great Recession,’ the prevailing pace of U.S. growth has been moderate at best, mired well below the economy’s long-term mean.