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Inflation and How We Got Here

Updated: Aug 16, 2022

Speaker 1 (00:00):

Welcome to the Redfish Healthy, Wealthy and Wise podcast. Our focus is to deliver information that helps you become healthy, wealthy, and wise. This podcast is sponsored by Redfish Capital Management, the views and opinions expressed here and do not necessarily represent the views and opinions of SCF securities, Inc, or any SCF related entity. This material is for general information only and is not intended to provide specific advice or recommendations for any individual securities offer through SCF securities, Inc. Member FINRA, S I P C investment advisory services offered through SCF investment advisories Inc office at 1 55 east Shaw in Fresno, California, SCF securities, Inc, and Redfish Capital management are independently owned and operated. SCF is not associated with other podcasts. And the messages contained within Brad Murrill and Redfish Capital does not offer legal or tax advice. This material is not intended to replace the advice of a qualified tax advisor or attorney please consult legal or tax professionals for specific information regarding your individual situation now for your host, Brad Murrill.

Speaker 2 (01:25):

Okay, good afternoon everybody. Hey, welcome back to another episode of the Redfish Healthy, Wealthy and Wise podcast. This is Brad and I have been in just a tad bit busy as you can imagine. So I haven't put up a podcast here and I think it's been 30 days at least. So I needed to put something up here and, and I wanted to talk to you about what's going on. Out there. Of course, everybody knows that this market has been getting pretty, fairly crushed. As, as I'm talking right now, the S and P 500 S down approximately 24, 20 5% from the highs. So as of, as of right now at that 24, let's call it 24%. That would make it one of the worst starts to the year since I believe 1970. So it's a pretty good little figure that we're, that we're able to quote here as far as the correction or now bear market is concerned.

Speaker 2 (02:25):

So I wanted to just come at you today and tell you a little bit about what's going on, why all this is happening. We can boil it down to one thing and that's interest rates and infl let's just call it not interest rates. Let's say inflation, we can boil this down to inflation. So what's happening out there is we are seeing increased inflation come about the CPI, which is the consumer price index, which is what many of us use to see as far as the gauge is concerned, how much inflation is out there? Well, the CPI Rosen made 8.6. That is the largest increase that we've seen in the CPI since 1981. So how did we get here? Cause it's come on fast. It's come on real fast. I think. Well, let me find my, my figures here. The okay. Let's take the, the five year treasury bond.

Speaker 2 (03:20):

So the real short treasury that yield right now is about 3.2%. And, and just not too long ago in 2020, the yield was 0.2, three. So you were getting 0.2, three with a five year treasury today. You're gonna get 3.2% is only about 178% higher. So it has been really, really fast. What's going on with interest rates. So how did we get here? It's a, it's a Marritt of different events. One of the really good blogs out there in my opinion is called the big picture. And it is written by a gentleman by the name of Barry Ritholtz. And I've always been a, a fan of Barry. Barry's you've heard me talk about it on this podcast and many of you in person before, I just, I like the way that he thinks and the way he goes about things.

Speaker 2 (04:16):

And he put out a great blog on yesterday and he listed 15 different items, which he thinks all kind of combined, if you will, to give us this interest rate scenario or inflation scenario that we're in. And one of the things that he points out is that in, in this blog, and I'm gonna get into some of the reasons for it. But one of the things that he points out is normally people love to have simple binary answers to complex questions. In other words, here's the simple reason why this is going on. And that's typically never, it's never, I don't wanna say never correct, but it's really hard to put something as large as the us economy and how it's moving into something. That's that oversimplified, if you will typically, where you're gonna see a lot of this oversimplification is in the political world, cuz people want to, if you're on, depending on what side of the aisle you're on, you want to cast blame on someone.