A return of inflation could turn markets on their head, warns Northern Trust

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Need to Know: There's a big wild card for markets this year — inflation

To be sure, investors are grabbing the headlines and obsessing about certain aspects of the market these days, such as the inverted-yield-curve mania.

According to Investopedia, high inflation periods can be positive for value stocks, but less great for growth stocks, but notes that for companies, a surprise jump is hardest as it takes several quarters to pass along those higher prices to consumers. The potential for bumpy days doesn’t mean investors should run scared from this stock market, she said: “I think the last several months provides a cautionary tale for investors, danger of being out of the market can be really high, you miss these best days and you really damage your returns.”

The chart Our chart of the day comes from Joel Kruger, currency strategist at LMAX Exchange, who commented to MarketWatch that “there have been distressing signs in an unsuspecting FX market that could be an early warning sign for investors to reconsider bullish bets” on stocks. The data calendar is light for Wednesday, with just the U.S. trade deficit for January due ahead of the open, with an appearance from Kansas City Fed President Esther George after the close.The buzz WellCare WCG, -3.93% shares are soaring after health-care group Centene CNC, -3.86% said it would buy the managed-care provider in a deal valued at $17.3 billion.Tesla TSLA, +2.

 

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