Time To Put "Inflation" Back Into the Dialogue???

fyi….I’d encourage a read of the following link.  

http://alphanow.thomsonreuters.com/2014/06/chart-week-oil-market-wobbles/ 

It’s an interesting assessment of oil price hikes and their impact on GDP depending on whether the hike comes from demand vs supply considerations.

Furthermore, take a look at the chart below showing commodity price action YTD.  Energy is not alone in its price spike;  livestock, the overall CRB, precious metals, all have had meaningful climbs this year. 

 

In a world where final demand for all kinds of goods and services is far less than robust, those higher cost pressures could potentially cause stress to margins and profits in coming quarterly earnings.  It’s worth considering that while this is happening, equity markets are at or near all-time highs!  And valuations on a P/E basis (both on a trailing 12-month basis and on a forward-12mth basis), while not at ‘bubble-esque’ levels, are in fact above historical averages.

Just a sobering word of defensive caution…..

Fyi.

Ed

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