Investors need to prepare for stagflation

It’s been awhile since investors faced a stagflationary environment

In stagflation, a high level of nominal spending growth cannot be met by the quantity of goods produced, resulting in above-target inflation.

Policymakers are not able to simultaneously achieve their inflation and growth targets, forcing them to choose between the two.

Inflation-linked bonds and gold perform the best, with the former benefiting from both weak growth and rising inflation.

Bob Prince FT 15 July 2022

The writer is co-chief investment officer for Bridgewater Associates

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