Inflation: The good, the bad, and the ugly

In an interview with Yahoo Finance's Seana Smith, Northern Trust Wealth Mgt. CIO, Kate Nixon breaks down her thoughts on the inflation outlook facing the United States.

Video transcript

SEANA SMITH: Inflation is obviously a serious headwind, but then we, of course, have the issue when it comes to the supply chain crisis, the bottlenecks that we're seeing play out, and of course, the ripple effects that that's having throughout the market. How big of a risk do you see this posing to investors, at least in the short term?

KATIE NIXON: Yeah, Seana, I mean, I think this is probably the biggest risk that we have right now, is that inflation expectations become unanchored. We have seen expectations rise pretty notably over the last couple of weeks. They tend to be really tied towards gas prices, which is not surprising. That's sort of what we see on a regular basis. So our expectations tend to get tied to what we experience frequently.

So we are seeing expectations come up. We are seeing the supply chain issues more prolonged than we had anticipated. We do think, though, that a year from now-- it's hard to think about it this way, but a year from now, investors are not going to be worried about inflation. So we're not going to build an overly inflationary protected portfolio for clients right now, acknowledging that we do think this will pass. It's just going to take a little bit longer. But you're right to bring it up because it's probably the biggest risk in the market right now.