Lyn Alden: Supply Shortages are Masking Real Inflation
Tom welcomes Lyn Alden, Financial Newsletter Editor & Publisher, back to the show.
Lyn discusses the massive increase in money printing coupled with shortages in goods and commodities. Prices have experienced disinflation due to globalization for a considerable period and now that is ending. The CPI metrics include hedonic adjustments that are masking some of the inflation in goods.
Lyn discusses the bottlenecks being created due to semiconductor shortages. Semiconductors are essential and shortages are having an outsized effect on the production of vehicles for example. Factories that produce semiconductors are expensive and therefore new supply takes time.
Energy is often directly correlated with inflation. Lyn discusses why fossil fuels will remain important. She notes that the world has never phased out an energy source but simply added new forms to the existing paradigm. We still use coal and biomass globally. Wind and solar work well for augmenting the grid but become challenging when the weather is calm and cloudy. Grid-scale energy storage solutions so far are resource-intensive and remain impractical. However, there has been an uptick in interest in nuclear energy which is hopeful.
Inflation today is not uniform as some countries like Japan that have not printed money recklessly are doing okay.
Value stocks tend to outperform growth stocks in periods of weak economic activity. This trend generally shifts around recessions and changes in monetary policy.
Lyn expects the Feds’ policy to remain largely the same and much will depend on the fiscal policy of the U.S. government. She believes they will be successful at tapering for a while. What will be interesting is their choice of policy when we reach the next crisis.
Lyn discusses the economic similarities of the present to that of the 1940s. Inflation will likely move in pulses and will include periods of deflation.
Time Stamp References:
0:00 – Introduction
0:31 – Inflation & Shortages
3:32 – Semiconductors
8:15 – Energy Economics
13:42 – Inflation Worldwide
15:22 – Value Stock Surge
20:48 – Powell Thoughts
23:14 – Past Inflation & Now
27:05 – Deflation Pulses
29:17 – Time Horizons & Risk
31:19 – Inflation in Rents
33:09 – Golds Performance
37:07 – Value Sectors
40:35 – Tech Vs. Bitcoin
43:13 – Bitcoin ETF & SEC
47:17 – Watch Energy Costs
48:12 – Wrap Up
Talking Points From This Episode
- Inflation, deflation, money printing, and the effects of globalization.
- Shortages and impacts of semiconductor supply problems.
- Energy and its correlation with inflation.
- What will be the outcome of the next Fed taper.
Guest Links:
Twitter: https://twitter.com/LynAldenContact
Website: https://www.lynalden.com/
Lyn Alden is editor and publisher of LynAlden.com, where she has both a subscription and a free financial newsletter. She says, “Her background lies at the intersection of engineering and finance.” Her site provides investment research and strategy, covering stocks, precious metals, international equities, and alternative investments, with a specialization in asset allocation. Whether you’re new to investing or experienced, there’s a lot there for you.
Lyn has a bachelor’s degree in electrical engineering and a master’s degree in engineering management, focusing on engineering economics and financial modeling. She oversees the finances and day-to-day operations of an engineering facility.
She has been performing investment research for over fifteen years in various public and private capacities. Her work has been editorially featured or cited on Business Insider, Marketwatch, Time’s Money Magazine, The Daily Telegraph, The Philadelphia Inquirer, The Street, CNBC, US News and World Report, Kiplinger, and The Huffington Post. She has also appeared on Real Vision, The Investor’s Podcast Network, The Rebel Capitalist Show, The Market Huddle, and many other podcasts. She is also a regular contributor to Seeking Alpha, FEDweek, and Elliot Wave Trader.