Some prominent voices in the media are beginning to talk about inflation again.
Gluskin Sheff’s David Rosenberg, former long-bond advocate and perma-bear on most stocks, believes that a deflationary spiral has abated; in fact, he expects inflationary pressures to build more quickly than the “there-is-no-stinking-inflation” crowd will anticipate.
He has advised adding some inflation hedges to portfolios, including TIPS, real return bonds as well as hard assets.
The problem with Rosenberg’s epic change of heart is that many market-based securities are not as confident about the onset of inflation as he is.
For example, iShares TIPS Bond Fund (TIP), iShares CDN Real Return Bond Fund (XRB.TO) as well as IQ CPI Inflation Hedged ETF (CPI) all trade near 52-week lows; what’s more, their respective downtrends are intact. [TIPS ETFs: Inflation Not Driving Rate Spike]
Similarly, if food price inflation were set to take off, one might also expect to see farmers, fertilizer makers, tractor manufacturers and agribusiness conglomerates do well as a group. Yet Market Vectors Agribusiness (MOO) remains in the doldrums.