Skip to content
Weekly Insights
Volume 10, Edition 42 | December 6 – December 10, 2021

Some Inflation is Easily Avoided

Doug Walters, CFA
This week proved once again that inflation is of big concern to investors. Yet the same investors who complain about the risk of rising prices, are flocking unnecessarily into highly inflated assets.

Contributed by Doug Walters, Max Berkovich

It’s all about inflation these days. With the jobs market strong, the Fed, and by definition, investors have turned their focus squarely to the topic of rising prices. Investors are consumed with the question of whether or not inflation will be transient. Time will tell, and as we often say, the best thing investors can do is prepare with a well-diversified portfolio. But that is not entirely accurate. Equally important is what investors do not do.

Inflation is, in part, a symptom of the supply constraints brought on by the pandemic. Food and energy costs are up, and these pricing pressures are hard for most to avoid. But inflation is also driven by the many forms of stimulus that have been propping up the economy for nearly two years. Low interest rates, stimulus checks, and enhanced unemployment benefits have all contributed to high demand, for… well… everything. There is inflation everywhere, and some of it is very avoidable.

This week, tickets went on sale to Disney’s new contribution to the Marvel Cinematic Universe series, Spider-Man No Way Home. Demand was off the charts, and scalpers were soon selling $20 to opening night for thousands of dollars. Now that is inflation! And, of course, entirely avoidable if you have the patience to wait one day.

The same excess cash that is buying overpriced movie tickets has created a number of bubbles that have the potential to lead investors astray. Meme stocks like Gamestop and AMC, despite significant declines recently, still have hugely inflated prices. Cryptocurrencies have no fundamental value, are driven purely by speculation, and are therefore massively inflated. NFT art, SPACs, etc… the list goes on. The opportunities for reckless speculation in overinflated assets are endless these days. Anyone concerned about inflation should be doubly concerned about this growing list of shiny objects. Luckily, they are easy to avoid for the disciplined investor.


Headlines This Week

US stocks staged a rebound this week, as investors once again were standing ready to buy the dip. Inflation, Jobs and Omicron dominated headlines and drove sentiment.

Mildly Helpful

This week investors were more optimistic given encouraging initial indications that the Omicron Covid variant produces relatively mild symptoms.

  • Stocks fell by about 4% from November 25th to December 1st as concerns about Omicron spread.
  • By this Wednesday, stocks had rebounded enough to fully close that gap and approach all-time high levels again.

High Expectations

Inflation has been running hot, so all eyes were on the November report released this week.

  • Headline November CPI came in at 0.8%, which was ahead of the 0.7% consensus but below the previous month’s print of 0.9%.
  • Year-on-year inflation came in at 6.8%, above the 6.7% consensus and last month’s 6.2% figure. This is the highest inflation since 1982.
  • Core inflation (ex-food and energy) came in at 4.9%, in line with consensus.
  • Stocks rose on the release implying that investors were expecting worse.


With unemployment running low, jobs have taken a backseat to inflation. Yet, the JOLTS report, out this week, is always an interesting angle on employment.

  • The JOLTS report looks at job openings, which were up 595K month-on-month to just over 11 million.
  • Perhaps encouragingly, the quits rate (2.8%) has come off its recent record high (3.0%). Turnover has been a big challenge for employers.
  • The ratio of unemployed workers to job openings is the lowest on record. This is a strong signal of full employment and will give the Federal Reserve more motivation for taking its foot off the economic accelerator at next week’s FOMC meeting.

Current Inflation Rate

The Bureau of Labor Statistics reported on Friday that prices for U.S. consumers jumped 6.8% in November compared with a year earlier.

The Week Ahead

Acceleration Time?

The Federal Reserve will be holding its monthly meeting next Wednesday amidst growing concerns about how the central bank will handle inflation.

  • Since Chairman Powell stated that inflation might not be so transitory after all, markets have been hesitant to move past its November high.
  • Concerns that the Fed might have to accelerate the pace of its asset tapering to make room for an interest rate increase in the spring have been growing inside and outside of the bank.
  • Back in September, it looked as if there would only be a single rate increase near the end of next year; now, the market has priced in three hikes, with the earliest coming in May.
  • Along with the potential decision to accelerate tapering, the market will wait patiently for an updated ‘dot plot’ of official interest rate projections.

Tough Decisions

Across the Atlantic, the Bank of England (BoE) and the European Central Bank (ECB) will be meeting on Thursday to determine their respective monetary policies.

  • It had looked likely that the UK’s central bank would raise rates before the end of the year, but now with Omicron forcing stricter measures, that chance has all but disappeared.
  • Market’s have almost entirely priced out a rate increase for December but still expect almost four of them next year.
  • The ECB faces quite a different story as the European economy struggles to get off the ground.
  • The central bank’s emergency asset purchases expire in March, leaving investors wondering if the bank will increase its regular asset purchases at that time.
  • Inflation data for both regions will also be out next week, which will surely gain attention amongst concerns that growing prices are not going away any time soon.

Under Pressure

China’s monthly data dump is next week and will come under scrutiny as the country struggles with concerns over slowing growth.

  • Embattled developer China Evergrande Group has officially defaulted, which is set to trigger cross-defaults of about $19 billion on the group’s international debt.
  • Worries that defaults could spread within the property sector and the broader economy of China are growing.
  • The main items to look at to gauge how China is handling the fallout include retail sales and industrial production on Wednesday.

About Strategic

Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on client assets of over $2 billion.



Strategic Financial Services, Inc. is registered with the Securities and Exchange Commission (SEC) as an Investment Advisor. The term “registered” signifies compliance with regulatory requirements and does not imply a certain level of skill or training.

The information provided on our website, including weekly market commentaries, financial planning articles, and other educational resources, is intended solely for educational purposes. It is designed to offer insights into financial planning and investment management, aiming to enhance understanding of financial concepts, strategies, and market trends. This content should not be interpreted as personalized investment advice or a recommendation for any specific strategy, financial planning approach, or investment product. Financial decisions are deeply personal and should be made considering the individual’s specific circumstances, goals, and risk tolerance. We recommend consulting with a professional financial advisor for personalized advice.

Please be aware that Strategic Financial Services, Inc. does not provide legal or tax advice. The content on this website is not intended to be used as such or as a substitute for legal or tax advice from a licensed professional. We advise seeking guidance from qualified legal and tax advisors regarding these matters.
Investment Risks and Portfolio Management.

The discussion of any investments on this website is for illustrative purposes only and provides no guarantee that the advisor will make any investments with the same or similar characteristics as those presented. The investments identified and described herein do not represent all the investments purchased or sold for client accounts. The selection of representative investments to discuss is based on various factors, including recent company news or earnings releases.

It should not be assumed that any investments discussed were or will be profitable. All investments involve risk, including the potential loss of principal. There is no assurance that investments mentioned will remain in client accounts at the time you view this information.

When index returns are mentioned on this site, they are provided as a general indicator of market conditions and are not representative of any client’s portfolio performance. Indices are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested in directly. Therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.

While index returns are used as a framework to report on general market conditions, they should not be construed as an indicator of future performance of any specific investment or portfolio. Discussion of index returns is intended to provide context and insight, not to suggest that clients will achieve similar results. Each client’s portfolio is managed according to their specific investment goals and financial situation.

The opinions and any forward-looking statements expressed in the articles and videos featured in our resource center are as of the date of publication. These statements are based on current laws, regulations, market conditions, and other relevant factors, including third-party data. Given the dynamic nature of financial and regulatory environments, as well as potential changes in market conditions or economic circumstances, the information provided may become outdated or may no longer be accurate.
We rely on third-party data to form our opinions and projections, which means that these are subject to the same uncertainties that affect all data-dependent analyses. As such, we advise readers to exercise caution and not rely solely on the statements made herein for making financial decisions. It is recommended that investors consult with a professional advisor who can help assess the relevance and accuracy of the content in light of the current economic climate and personal financial situation.

Our website contains links to third-party websites as a convenience to our users. Strategic Financial Services, Inc. does not control, endorse, or guarantee the content found on such sites. We are not responsible for the accuracy, legality, or content of the external site or for that of subsequent links.
Contact the external site for answers to questions regarding its content.
The inclusion of any link does not imply our endorsement of the site, nor does it imply any association with its operators. Use of any such linked website is at the user’s own risk.

Related Resources