With oil pushing $120 a barrel at times this week, the financial world is rife with talk of energy plays — which competes with agriculture as a top spot for hot.
The price at the pump has already reached as high as $4.51 in California, and the Department of Agriculture on Thursday released its forecast that food prices will increase 3.5% this year.
At higher elevations, revolution and repression in the Mideast, which has its origins in food-price hikes, and is coming back to us with oil price hikes, encapsulates the trend.
But, rather than pile into energy and ag stocks, is there an alternative approach?
Indeed, dramatically rising food and energy costs are almost the definition of inflation. I say almost since, although food and energy are important parts of the basket of goods and services that make up the consumer price index (CPI), they are excluded from “core” inflation, a gauge used to view inflation from a longer-term perspective.
But events and trends in the world seem to suggest the surge in food and energy costs have room for further escalation.
And this will unleash the hawks among monetary authorities worldwide, who were already beginning to gain the upper hand in internal policy meetings.
This monetary connection suggests a foreign-exchange play.