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PPI Crash: Unveiling Inflation’s Future or Corporate Gouging? | Nucleus Investment Insights

Posted on by Samuel Kerr
03
Aug
Globally producer price indexes have turned down quite decisively. China is trying to deal with deflation.

 

There are two main explanations, with diametrically diverging investment outcomes.
Under the first scenario, producer price inflation is a leading indicator for consumer price inflation. Falls in the producer price indexes will inevitably flow through to inflation indexes. Sell stocks, buy bonds.

Under the second scenario, the gap is an indicator that companies continue to be able to expand margins. It is a sign that companies are raising prices to consumers faster than their own costs are growing. Buy stocks

In this week’s podcast, Nucleus Wealth’s Chief Investment Officer Damien Klassen and Senior Financial Adviser Samuel Kerr dig into the arguments and look at the evidence.

Agenda:

  • What is the Producer Price Index
  • Divergence or lag
  • Two options: good for margins, terrible for margins
  • Reporting season
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    Samuel Kerr

    Samuel is Nucleus Wealth's Head of Advice. He has a Master's of Financial Planning and a Bachelors degree in Psychology. He has worked in Financial Services since 2017 as a Financial Adviser and Mortgage Broker. Sam is a dynamic individual and has a real passion for investing and compound interest. He prides himself on his professionalism and ethical conduct, always striving for the best outcomes for his clients. He really enjoys helping people achieve their goals and loves the investment journey.

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