This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

As Vaccines Arrive, There’s A Whiff of Inflation In The Air


President Y H & C and a Portfolio Manager for Interactive Advisors

With an increase in vaccinations taking place, the newly approved Johnson & Johnson (JNJ) vaccine should help supply expand and distribution pick up even more over the next few months in my view. 

Infection and mortality numbers have been declining over the last few weeks, and investors are embracing this data with increased enthusiasm for the economically sensitive pieces of the economy. 

Oil prices have jumped to more $60 per barrel while bond yields now hover around the 1.5% level for the 10-year Treasury note. 

With a whiff of inflation in the air, Federal Reserve Chairman Jerome Powell remains committed to prioritizing improving employment and allowing inflation to run hot for as long as needed.

Earnings dynamics

On the earnings front, in my opinion corporate profits remain in good shape as large segments like banking, technology, telecommunications, housing, automobiles, and industrials continue to provide stability and strength. 

The consumer area is also strong as household balance sheets are bolstered by lower borrowing costs on mortgages and credit cards. 

Retail sales, especially at those companies with a strong online or omni-channel presence such as Amazon (AMZN), Target (TGT), WalMart (WMT), and Costco (COST) have also held up well. 

With economic conditions holding up nicely in most areas, in my opinion the service-related part of the economy looks poised to rebound when the economy opens in full six to 12 months from now.

X Factor

The unknown question for investors is whether the economy will rebound so strongly that inflation roars its head far more than anyone expects?

On the investment side, with pockets of craziness still quite evident, valuations remain historically elevated. 

The continuing justification for this is the low level of interest rates, accompanied by the rationalization that the Fed is in no hurry to begin tightening. 

As such, traditional metrics seem to be flashing warning signs about the outrageous multiples a favored few stocks have been rewarded with. 

As is the case in nearly any market, very few winners find such extreme levels, so sifting through the sand to find the few valuable companies remains a challenge. Good luck on your hunt.

Originally Posted on March 8, 2021 – As Vaccines Arrive, There’s A Whiff of Inflation In The Air

Disclosure: Interactive Advisors

This material is not intended as investment advice. Interactive Advisors or portfolio managers on its marketplace may hold long or short positions in the companies mentioned through stocks, options or other securities.

Pursuant to the Investment Management Agreement between Interactive Advisors and its clients, all brokerage transactions occur through Interactive Brokers LLC, an affiliate of Interactive Advisors. Interactive Advisors does not offer services through any other broker-dealer. The use of an affiliate for brokerage services represents a conflict of interest. Interactive Advisors clients acknowledge this conflict of interest and authorize Interactive Advisors to execute transactions through Interactive Brokers LLC when they open an Interactive Advisors account. Clients should consider the commissions and other expenses, execution, clearance, and settlement capabilities of Interactive Brokers LLC as a factor in their decision to invest in an Interactive Advisors Portfolio. Interactive Advisors believes it can meet its best execution obligation by trading its clients’ trades through Interactive Brokers LLC. While there can be no assurance that it will in fact achieve best execution, Interactive Advisors does periodically monitor the execution quality of transactions to ensure that clients receive the best overall trade execution pursuant to regulatory requirements.

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Interactive Advisors, an affiliate of Interactive Brokers LLC, and is being posted with permission from Interactive Advisors. The views expressed in this material are solely those of the author and/or Interactive Advisors and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

In accordance with EU regulation: The statements in this document shall not be considered as an objective or independent explanation of the matters. Please note that this document (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on dealing ahead of the dissemination or publication of investment research.

Disclosure: Futures Trading

Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at

trading top