Jim Niedelman:
It is 4 Your Money time once again. We’re joined by John Nelson financial advisor with NelsonCorp Wealth Management. Always. Great to see you, John.

John Nelson:
Good to see you, Jim. Thank you for having me.

Jim Niedelman:
Absolutely. We spend time recently talking about inflation through the lens of commodity prices and interest rates. What else can people watching at home look forward to help understand the situation a little better?

John Nelson:
Yeah, it’s certainly been a volatile period of time for that space, Jim. We’re actually in the midst of constructing a new office here in the Quad Cities, and we’ve seen some of these price changes firsthand. We’ve been watching with a keen eye and from lumber prices to electrical products, other materials, they’ve seen a lot of price swings to the upward movement lately. Having this kind of inflationary period of time facing us now that we haven’t seen in quite some time, that’s one of our biggest themes for 2021. And we’re certainly keeping a close eye on it.

John Nelson:
If we look at things like manufacturing, price inputs for that, that affects a lot of big companies. So if we continue to see bigger employers having to pay more, that they can’t possibly have the margin to absorb all of that. So that could be passed on to consumers. We’re keeping a close eye on the CPI, the Consumer Price Index for inflationary movements upward, that again we haven’t seen in a very long time, and another big area of focus that we think sometimes gets forgotten, is the U S dollar’s impact on this. So the U S dollar, a lot of these materials are priced globally in dollars. So if we see the dollar continuing to fall, that in essence makes these products cost even more, so that’s supply and demand certainly has a significant impact on whether it, we see the inflation picking up, but the U S dollar we feel is far more important and we’re keeping a very close eye on that at this time.

Jim Niedelman:
You hit on those raw materials a moment ago, a little more context now about what you just talked about. The U S dollar, what has that looked like over the last year?

John Nelson:
It’s been steadily declining. So when COVID … I’ve got a chart that I brought with me today, as when COVID struck, you can see that the U S dollar increased pretty dramatically. This is not unlike other times when there’s times of crisis. Usually there’s a lot of investors around the world that see the United States and the U S dollar as a safe haven. That caused that significant spike and is very typical of all their crisis in the past. Having said that, from that peak earlier in the year, we saw, we can see here on the graph, a steady decline. So that’s a big area of a focus for us going into the rest of 2021. You can see to the very far right on the chart there, we have seen the last few weeks, a bit of a move up, nothing significant, but something we’re keeping a close eye on.

John Nelson:
If we continue to see that downward trend, there could be many things that are effected by that. And one being that, relative to the United States markets, if you look at equities and bonds and other markets, with that decline Jim, throughout the most of this year, they have seen a price increase. Those markets have done well. The United States has definitely been the place to be the last 10 years, but with the U S dollar softening, we could see those other markets, emerging markets, international type positions, picking up.

Jim Niedelman:
So what implications does movement in different currency have on the investments that people make?

John Nelson:
Yeah, I’d say what we see firsthand is a lot of concentration to the U S markets. And in hindsight, of course, that’s been a fantastic decision over the last 10 years, but as we possibly may see some of these trends reversed, they usually don’t last this long, but if we continue to see the U S dollar softening out, some of those positions, and some of those markets are really going to benefit from that, emerging markets in particular. So there’s an old saying in our business that if you want to get wealthy, concentrate; if you want to stay wealthy, you diversify. And I think right now we’re seeing a lot of concentration for both retail investors, as well as institutional investors, that have been in the U S, has paid off significantly for that concentrated position here in the U S. But you know, some opportunities may be missed if people are not re-analyzing and looking at the positions that they own. Emerging markets international, they haven’t seen the run-up the U S has. We would expect the longer term trajectory there to see some of those prices level off to more normal levels.

Jim Niedelman:
John Nelson, NelsonCorp Wealth Management, great insight as always John. Thanks.

John Nelson:
Thank you, Jim. Appreciate it.

Jim Niedelman:
And in case any of you missed any of this discussion, we have that available for you on ourquadcities.com.