Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to subscribe.
"... As you can see in today’s Chart of The Day (slide 41 in our current Global Macro Themes deck), inflation expectations hit an all-time high in 2011-2012 as Ben Bernanke devalued the US Dollar to a 40-year low.
That, you see, was the key to Bernanke’s storytelling – not creating real, sustainable growth – but creating the illusion of growth (commonly called inflation). With that expectation in hand, the world’s asset inflation chasers built massive oversupply.
Priced in devalued Dollars, 2 of the top “asset classes” one would chase if expecting perpetual inflation are:
- Commodities that settle in US Dollars
- Leverage (Debt) linked to inflation expectations
That’s why our recommended asset allocation to both Commodities and Junk Debt has been right around 0% for the last 18 months."