The last week has been something of a sucker punch for the "inflation trade."
A sucker punch is when someone hits you unexpectedly, often in the gut. It initially knocks the wind out of you and puts you into crisis mode.
However, sucker punches rarely if ever result in a knock out or KO. Once you get your breathe back, you’re ready to fight.
I believe the markets are in precisely this state. The Trump election win was a sucker punch that the markets didn’t see coming. And the random chaos in the financial system (I’m talking about Emerging Markets, the $USD, Gold and the like) was the result of the markets not being sure of themselves.
That period is now ending. And the inflation trade is ready for its next leg up.
With that in mind, consider that inflation expectations are erupting higher
H/T Jeroen Blokland
Meanwhile, core inflation has been above the Fed's target of 2% for 12 months.
Brazil is THE commodity play of the world. If EWZ holds, commodities will be exploding higher.
Right now EWZ looks to have found support. I believe this signals the chaos is ending in the markets.
This is a MAJOR signal. Inflation is coming. And the biggest opportunities will be in inflation hedges such as Gold and Gold miners, rather than stocks.
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Chief Market Strategist
Phoenix Capital Research