The world will be watching the Fed today, mostly because inflation is running at decade-highs, and many expect the Fed to – for the first time in 2021 – actually do something about it.

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But, while the world will be waiting on pins and needles for the Fed statement to be released at 2 p.m. EST, we won’t be holding our breaths.

That’s because we aren’t afraid of inflation.

You heard me right. We are not afraid of inflation. Yes, we understand the rest of the financial world is freaking out right now. Yes, we’ve seen the calls for a 20%-plus market crash next year thanks to inflation. Yes, we’re heard the market pundits saying the Fed is way behind the curve.

And guess what? We’re unconcerned, mostly because the despite all this fear, uncertainty, and doubt, the overwhelming bulk of data today continues to suggest that inflation pressures will significantly ease in 2022.

Consider these five critical data-points:

1. Supply chains are improving. A large driver of inflation in 2021 has been supply chain constraints brought on by the Covid-19 pandemic. Throughout the past year, emerging market manufacturing activity has been hampered by social distancing policies, the likes of which have created massive supply shortages. However, the Manufacturing Purchasing Managers Indices in Russia, India, China, Indonesia, Japan, Malaysia, and Vietnam have all improved dramatically over the past few months, signaling improving manufacturing capacity in those emerging markets at the same time that social distancing policies have eased. We believe this trend of improving emerging market manufacturing activity will persist in 2022, and will set the stage for supply chain normalization, which will remove one of the biggest inflationary pressures from the global economy next year.
2. Comparables are getting easier. Throughout 2021, inflation has been running red-hot on a year-over-year basis, but at the same time, the comparable periods have been very easy. That is, throughout 2020, inflation was averaging below 2%. When lapping against sub-2% inflation, it is easy to put up big headline numbers. However, starting in the second quarter of 2022, inflation will be lapping against the red-hot 4%-plus inflation numbers we’ve seen throughout 2021. It is much harder to put up big headline numbers against 4%, 5%, and 6% inflation comparables than it is to do it on 2% inflation comparables. Tougher comps will naturally suppress headline inflation in 2022.
3. More companies are adopting automation. In the wake of escalating wage pressures, many companies have turned toward automation. According to a recent Deloitte survey, around 73% of companies have embarked on a path toward intelligent automation – a stunning 58% jump from the number reported in the 2019 survey. In other words, automation is on the rise throughout the enterprise, and that is an enormous deflationary force which should reduce costs and improve productivity. We expect 2022 to be a year wherein a lot of these new automation deployments start to yield deflationary effects.
4. The velocity of money is still falling. One of the biggest drivers of deflation over the past three decades has been a drop in the velocity of money – i.e. companies have been spending money less quickly due to a proliferation of productivity-boosting technology. This secular trend has not reversed course. Despite the red-hot inflation of 2021, the velocity of the M2 money stock in this country has continued to drop. Therefore, once short-term supply chain pressures ease, we fully expect declining money velocity pressures to kick back up and continue to pull prices lower.
5. Inflation hasn’t been a problem in 40 years. The elephant in the room here is that inflation has not sustainably broken above 2% since the dawn of the internet in the early 1990s, and that’s because the internet has birthed multiple cost-cutting and productivity-boosting technologies which have worked to create a secular drag on inflation. We believe those cost-cutting and productivity-boosting technologies – like workflow automation, warehouse robotics, self-driving delivery cars, and more – will continue to proliferate across society, and continue to create deflationary forces in the economy long after today’s supply chain disruptions pass.

Overall, we think the world is becoming unnecessarily skittish about the thought of runaway inflation. Our take? It simply isn’t going to happen. Easing supply chain disruptions, tougher comps, and cost-cutting technology will all work together to reign in inflation in 2022.

And, as inflation does get reigned in, hypergrowth technology stocks are going to soar.

That’s why we think now is the time to get bullish on these stocks. They’ve been beaten-up in 2021 on inflation concerns. As those concerns fade in 2022, they’re going to roar!

Trust us. As tech investors with dozens of 1,000%-plus winners under our belt, we’ve never seen a better buying opportunity in potential 10X investments than right now.

But… in these volatile times… you must pick the right tech stocks to win big in 2022.

So, to find out which world-changing tech stocks we’re buying on the dip, click here. We’ll show you the best tech stocks to buy now for 10X gains.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.