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How Model Portfolios Can Fight Impending Inflation


May 12, 2021
This year, advisors are likely hearing plenty about the relation trade – a scenario that implies inflation is either here, or soon will be.
Turning to fixed income assets designed to contend with a rising Consumer Price Index (CPI) is an option, but there are other, stronger considerations, including the WisdomTree Core Equity Model Portfolio.
“This model portfolio is designed for growth-oriented investors with a long-term horizon looking to maximize long-term potential for capital growth through a globally diversified set of equity ETFs,” according to WisdomTree.
Currently, the Federal Reserve isn’t sounding the inflation alarms, but advisors should prepare for a rising CPI before that scenario arrives in earnest. ....

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Calculated Risk: Real Personal Income less Transfer Payments


$541
A key measure of the health of the economy (Used by NBER in recession dating) is Real Personal Income less Transfer payments.
Click on graph for larger image.
This graph shows real personal income less transfer payments since 1990.
This measure of economic activity increased 0.9% in March, compared to February, and was down 1.2% compared to February 2020 (previous peak).
Another way to look at this data is as a percent of the previous peak.
Real personal income less transfer payments was off 8.1% in April 2020. That was a larger decline than the worst of the great recession.
Currently personal income less transfer payments are still off 1.2% (dashed line). ....

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