Recently, I wrote that as we proceed along the road of economic recovery, investors will need to be vigilant for inflation signs. Well, this week, we passed a giant billboard. The consumer price index, which measures more than 200 categories of goods and services, is a broad measure of the prices Americans pay every day. Alarmingly, it rose 0.8% in April from the previous month, the biggest increase since 2009. The index also rose 4.2% from April 2020 - but that figure is less relevant, given that prices fell sharply last year due to the pandemic and associated lockdowns. So there are so-called base effects that distort the year-over-year data. Yet, if you look at the monthly data, it's clear that inflation is rising consistently this year. What's not clear - not to investors, economists or the Federal Reserve, despite what the Fed may say in public - is whether that trend will continue or be only temporary, as the Fed has suggested. So it's no wonder that financial markets hyperventilated on Wednesday after the U.S. Bureau of Labor Statistics released the April data. After the release, the S&P 500 Index was down 1.5% around noon, but the tech-heavy Nasdaq did worse, tumbling almost 2.3% by midday. As I've written before, inflation is the one variable that could impact both asset prices and the Fed's interest rate policies - as well as knock down both the economy and the bull market. The Fed has said it expects a few inflation reports to come in high this year as the economy runs hot, but it says these are likely to reflect "transitory" inflation that will pass. Other economic analysts are less confident it will unfold in that way. (And one great way to watch how the market is anticipating inflation is to monitor the prices of commodities, like copper and timber. They have been rallying lately, and a more accelerated rise could signal that markets think problematic inflation is on the horizon.) I Want a Used Car... Now! Many commentators point to the massive expansion of the monetary supply by the Fed and the federal government over the past year as the source of this scary rise in prices. For example, the price of used cars increased a whopping 10% from March to April. The average price for a used car hit $25,463 in April, about $2,800 higher than the average price a year ago, according to J.D. Power. Looking at those price increases, you can reason that all those stimulus checks that have been sent out over the past 12 months are allowing buyers to bid up the prices of used cars. Much more money in circulation, chasing a relatively stable volume of used cars, means those cars will be sold at higher prices. So there's clearly a demand surge going on. At the same time, however, there are supply constraints. Dig a bit deeper and you'll learn that the global shortage of computer chips has limited the supply of new cars, which has pushed many buyers to the used-car lot. You'll hear a lot more about demand growth and supply problems as the recovery unfolds. It's an important debate because supply constraints may be very temporary, as manufacturers and service providers ramp up their output levels. Demand growth, well, that might be harder to fix - and may require the Fed to step in. Either way, there are things you can do until we figure it all out. Wealthy Retirement Contributing Analyst Jody Chudley recently wrote about a few ways to protect your wealth against inflation if, indeed, it's not just transitory but here to stay. Jody points to financial sectors stocks, real estate and even cryptocurrency-related stocks, as they may profit if inflation erodes people's faith in the value of the U.S. dollar. And while cryptocurrencies are a pretty good inflation hedge, many people are wary of getting into such a volatile market. But that doesn't mean you should write off crypto altogether. Chief Income Strategist Marc Lichtenfeld has a way to get into the crypto market without undue risk because he is confident that the market is only going to get bigger... And he wants you to be able to get in on it. Just click here to learn more. Enjoy your weekend and stay safe, Matt | 
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