These markets will benefit from the structural shift of inflation

Following the COVID-19 pandemic U.S. has another crisis to worry about – inflation that is sticking around. This showed its effects on the U.S. consumer price index as it increased 5% in headline inflation which is its sharpest increased since 2008.

While markets have dismissed the chances of inflation merely taking it as a transitory fuelled by short-term factors, David Neuhauser, Chief Investment Officer of Livermore Partners, argued that this is more than transitory. According to Neuhauser, more fundamental structural shift is taking place.

Livermore Partners noted that the wages in the U.S. are not increasing as compared to the GDP growth of 6%. Average growth in hourly wages has decreased 2.8% as compared to previous year.

Amidst the structural shift Neuhauser believes that banks and industrial commodities are set in the start of new super-cycle, thus his fund largely focuses on commodities. Super-cycle is a decade-long period where commodity prices remain higher than the long-term trends.