In understanding the economic landscape, inflation plays an important role in the returns, correlations, and even volatility of different assets. By designing an objective way to view inflation through many models, I can better understand the environment that may be present in the near future. Below is one simple model used in analyzing the inflationary environment.
When my signal line is above the upper red line, the CPI gaines 4.12 points a year on average. On the flip side, when the black signal line is below the lower red line, the CPI loses -0.31 points per year. While this model is nowhere near perfect, it is one of many tools used to understand the current environment, the possible risks, and the best course of action given the facts that are understandable.