CPI is crossing 10-Year Yield, what should you do?

There are a lot of recent news about Consumer Price Index and 10-Year Yield. Let zoom out and let figure out what is going on with CPI and the 10-Year yield curve as of 2021 Q1 vs the recent history.

• If CPI represents inflation, and the 10-Year yield represents the cost of capital, what should you do if inflation far exceeds the cost of investing / capital?
• Is Cash King, i.e. is it a safe place for your wealth?

• Can data turn into knowledge and become tangible wisdom for everyday Joes?

Each day, investors are treated to news about the economy and information about how the stock market has done recently. It can be very difficult to process what’s going on because at any given moment in time, there may be very little correlation between how things are going in the real world and how prices are acting on Wall Street.

The short term trend of CPI or 10-Year Yield will continue stir up instability in Q1 2021. One of the most ironic aspects of investing is that the greatest gains lie ahead at times when things are bad, but not quite as bad as everyone suspects, and slowly, almost imperceptibly getting better. This is the moment when assets are selling at discounted values and the opportunities are laying at our feet, there for the taking. The key question is that is there any long-term insight embedded within the correlation between CPI and 10-Year yield curve?

Let take a closer look at S&P 500, here is the forward earning yield less 10-Year yield for your reference.

Can you see any inight there?

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