Finance

Assets benefiting from rising inflation are poised for a multi-trillion dollar bull run, top macro strategist says


Fox Business

  • Larry McDonald predicts that trillions of dollars will flow out of growth stocks over the next decade.

  • This is because money is flowing to “inflation beneficiaries”, meaning assets will increase if inflation remains high.

  • He predicted in a recent interview that this could catalyze a bull market in assets such as gold, aluminum and energy.

Top strategist Larry McDonald says assets benefiting from persistently high inflation are poised for a huge bull run.

The author of “The Bear Trap Report” and former head of U.S. macro strategy at Societe Generale warned of high prices in the economy and unanimously predicted that inflation would remain above the Fed’s 2% target in the coming years. Prices may fluctuate between 3%. In a recent interview, he predicted growth of %-4% over the next decade. Blockwork’s Forward Guidance podcast.

“All of these sources of persistent inflation are coming toward us,” MacDonald said, citing price pressures from reshoring, government stimulus and a strong labor market.

These pressures are exacerbated by the fact that geopolitical conflicts are intensifying. MacDonald said the war itself caused inflation. stagflation crisis In the 1970s, the Vietnam War broke out.

“As a result, we are entering a more sustained period of inflation,” he warned.

But this could actually be good news for “inflation beneficiaries,” or areas of the market that will actually surge as prices remain elevated. Those beneficiaries include assets such as nickel, aluminum, uranium, copper, gold, oil and gas, and MacDonald said it was estimated the energy grid alone could be worth about $2 trillion.

This shift will attract a lot of money from popular growth stocks such as Hao QiFor hard assets and commodities, interest in some of these assets has risen, he added. Gold prices soar to record highs this week.

“We’re talking about trillions of dollars of capital migration, and no one is prepared for it,” McDonald said.

Still, investors largely expect inflation to return to its long-term target next year. One-year inflation forecast Interest rates fell to 2.07% in March, according to the Cleveland Federal Reserve. Prices have cooled significantly from their 2022 highs, Consumer prices rose only 3.2% in February.

McDonald is currently one of Wall Street’s most pessimistic forecasters, and he has repeatedly sounded the alarm about the stock market and the economy. inflation pathIn March, he predicted that stocks could plunge 30% in the next two months due to the economic impact of rising interest rates.He also made the same prediction 2023 Forecastthat year The stock actually soared 25%.

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