What to buy when markets crack

The debate over whether inflation is transient or not is coming to an end. Most economists and central bankers have woken up to the fact that it may stick around for longer than they first thought. Price rises and shortages now seem to be building on themselves. Even The Daily Star recently highlighted arbitrage in the eBay market for Walkers crisps under the headline “Crisps Crisis”. Central banks are bracing themselves accordingly.

Team transient is on the ropes

A few months ago, the inflation debate was all about whether inflation was “transient” and due to short-term price increases driven by economic reopening; or structural and caused by deep economic disruptions caused by government responses to the pandemic. I had thought it was the former, but by September, I had changed my mind. Since then even more evidence has emerged to back the “structural” case.

The first thing we would expect if inflation were being driven by government responses to the pandemic is that supply chains