With inflation rates rising across global markets, a report from Yahoo Finance today shows that the world’s biggest wealth fund shares concerns about the possibility of what is to come in the future.
Norges Bank Investment Management of Norway is the biggest fund on Earth, and recent statements from the head of the fund show that it may be too big to properly prepare for any reallocation of funds to secure it against miscalculations of further potential inflation.
CEO Nicolai Tangen said from the report that, “We are at a situation now where bond yields are extremely low and the stock market is extremely high and so therefore any major change in inflation will hit both parts of the portfolio. In the past, it’s been one and not the other. But this time, both can move in the same direction.”
This statement was made in an interview with Bloomberg Television on Wednesday with Jonathan Ferro, where Tangen also said that, “We are very long term investors, and we’re so big it is kind of difficult to move around. We are in a way also too big for counterparties.”
Tangen warned that rising inflation is the world’s biggest threat, and that this situation may unfold unlike previous cycles before it.
Debates still continue today as to if inflation in the recent economy is temporary or not, but stock markets, 401k’s and value stocks continue to rise. Individually, the investment company holdings in real estate grew, while investments in bonds and renewable energy fell. It claims to have an outlook to focus more on its holdings in North America over Europe, where it holds increases in its technology holdings of the likes of Apple, Microsoft, Google Alphabet and Amazon.
Inflation rates are currently at decade highs in the United States, with a report today from Market Watch showing that the Central Bank continues to have growing concerns that inflation will remain through 2022.
A recent report from the last meeting in July of the Federal Reserve stated that, “Many participants remarked that uncertainty was quite high, with slowing in progress on vaccinations and developments surrounding the Delta variant posing downside risks to the economic outlook.”
It is also important to remember that over 40% of all US dollars in existence were printed over the past year. Since printing more money isn’t backed by real world economic output, this, in itself, should be something that everyone is concerned about.
Is hyperinflation on the horizon? Or will Modern Monetary Theory prove to sustain the future?
Only time will tell.