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RETURNS IN DIFFERENT INFLATION ENVIRONMENTS

Mike Shedlock posted a useful chart showing market returns in different inflation environments (via JP Morgan).  Shedlock is quick to note some flaws in the chart (primarily valuation), however, I think the chart offers a useful framework for various inflation environments regardless of its flaws (no indicator is perfect).   Given the current inflation rate of 2.7% (and rising) we can conclude that the lower left hand quadrant is the current market environment.   No wonder commodities and equities continue to outperform….

Source: JP Morgan

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