Hello. My name is Chad Taylor, managing partner with MDT Financial Advisors here in Houston, Texas. I've recently had a number of conversations with clients about inflation. Inflation, the US CPI report as of October showed at 6.2% gain year over year in inflation. If you've been to the grocery store lately you know what I'm talking about. Some of the major factors for this inflation were food, energy, shelter, and new and used cars. Is this rise in inflation a temporary or a long term deal?

                At this point, we think it could possibly be both so strong demand for food, energy, and autos has aggravated the global supply disruptions. Basically, people want goods and because of the global supply issues they can't get them, so if you can't get something and there's fewer items, what happens? The prices go up. That's what you're seeing in some inflation. In fact, have you tried to go buy a car lately? I don't know if you've driven by an auto dealership, they don't have any cars so what happens when they don't have any cars? They're not giving good prices, of course, and the prices go up.

                There's many factors for all these supply chain issues; policies in China, like their cutting coal usage, factory closures of microchips used in autos and electronics. In fact, if you remember the freeze that we had here in Texas earlier in the year, that contributed to that, there was a big microchip factory here in Texas. Limited OPEC oil or just the transportation bottlenecks here and overseas. I don't know if you've noticed any of the videos or news stories of those container ships outside of California, they're just kind of sitting out there. It's a bottleneck.

                WE see a more balanced supply and demand in food, energy, and autos by the middle of next year, thus starting to bring down inflation. Some of the reasons why you kind of see some of the COVID payments starting to dry up, which is with the higher prices is starting to bring down demand a little bit, as well as factories in Asia that are reopening. All of that should help with some of those supply issues.

                Then if you kind of look at raw materials like lumber, copper, soybeans, they're all much lower than they were earlier in the year. Usually the raw materials predict the consumer inflation 12 months out so we can expect consumer inflation to start slowing by mid-year and materially by next year is what we're thinking at this point, but it could go higher before it starts heading down again. That's probably the good news that inflation we do predict it to start heading back down next year, later part of the year, but there are some risks there. The risks that price gains and wages and rents continue up, if those happen that could be a longer term issue, but that's not our view at this point. We think that too will start to come down later part of next year, which won't lead to a long term inflationary environment, at least how we sit right now.

                I want to thank you again for spending a few minutes with me here on this video to talk about inflation. If you'd like a little bit more information about it, please let me know and we can get you some of the reports, or if you'd like to talk about anything please don't hesitate to give us a call. We always look forward to talking with you. With that, I hope you have a great day and look forward to the holidays. Thank you.