How to play the inflation Trade

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How to play the inflation Trade

It's when prices rise and goods and services suffer in quality. There are signs of skimpflation all around us. Maybe you're seeing longer waits for food delivery, fewer condiment options at the convenience store, and bare-bones customer service at the airport or hotel reception desk.

The COVID 19 epidemic is nearing the two-year mark and consumers are noticering that service just hasn't been the same at the local restaurant, the airport or hotels. The details show that businesses across the country are facing inflationary pressures. Travelers are not aware that hotels are no longer providing daily housekeeping services and that breakfast buffets have turned into grab-and- go cereal and coffee. Companies are skimping on goods and services instead of raising prices, creating a different type of inflation.

Our team of experts discussed how to inflation-proof your portfolio during these challenging times. The 45 minute conversation is hosted by TheStreet's Susan McGinnis. See the excerpt below or watch the full webinar below.

How do I play the Inflation Trade?

David Schassler, Portfolio Manager of the Inflation Allocation ETF, RAAX, at VanEck, is concerned about the stagflationary scenario.

00: 38: 15 Corporate earnings are under pressure. With wage inflation pressured the margins. Employees are demanding higher wages because of the fact that they are taking the reins. Schassler says he is looking for companies that benefit from higher inflation.

Some businesses are adding surcharges to their bills that could cause you to miss it if you are not looking. Surcharges may be charged in the form of a COVID- 19 fee, Coronavirus Fee, PPE Fee, Sanitation Fee, or Cleaning Fee. Skimpflation is a measure that isn't being captured in government data despite its seemingly transitory nature, which is a measure that isn't being captured by the national labor shortage and supply chain disruptions. Will there be a breaking point for consumers and businesses as the quality of service declines?

In the 1970s, there was a decline in bonds and stocks. The current investment landscape is not one for investors to be complacent without reevaluating and diversifying assets, as the current fiscal and monetary policy environment is different.

Nancy Davis, Founder and Chief Investment Officer, Quadratic Capital Management, is concerned about the potential for a stagflationary environment and its effects on a traditional 60 -- 40 portfolio.

The big bugaboo in a room that hasn't really been talked about. Earnings will be affected by wage pressures, so can companies raise prices just enough to offset wage hikes or will shareholders bear the brunt of lower earnings.