South Korea inflation is up again from prior month. Why should it matter? It matters because S. Korea is one of the largest trading partners of the United States and inflation in S. Korea means their exports will be more expensive and their imports will be more costly.
Fortunately, the Federal Reserve finally agreed that inflation is not “transitory” and we all know inflation can pose systemic risks to the entire economic system if it spirals out of control.
In any event, the best thing to do is prepare a defensive portfolio that can generate income while inflation rages to cover the costs of everything being higher. Please be aware that we are largely in cash, about 80% and only invested in stocks about 20% at the moment. We believe in accumulated value stocks during pullbacks and corrections at a relatively slow pace. We don’t intend to add anymore stocks to our portfolio until we get over the upcoming debt ceiling issue and the start of the new year.
We are also concerned about the impact of the Omicron Covid variant and the impact it may have on the economy. It’s hard to sit tight but we think it’s the prudent thing to do.