Inflation

The Center for Retirement Research at Boston College recently published a research brief that analyzes the impact of annuitization on retirement security .

Pacific Investment Management Company (Pimco)--the large asset manager headed by Bill Gross--has taken a position that reflects skepticism of the possibility of long-term deflation in the United States. During the first half of 2010, Pimco entered into derivative contracts with a notional value of $8.1 billion.

Over the past several years, retail investors in the United States have been moving their money into bond funds at a pace not seen in 23 years. The movement of money into fixed income funds by individual investors has outpaced contributions into equity funds for 30 straight months.

Bloomberg reports that Warrenn Buffett is shortening the duration on Berkshire Hathaway's fixed income holdings. Twenty one percent of Berkshire's bond holdings are short duration and due in less than one year. This represents a 3 percent increase from eighteen percent on March 31 of this year, and a 5 percent increase relative to the second quarter of 2009.

The consumer price index has fallen for two consecutive months: 0.2 percent in May and 0.1 percent in June. The unemployment rate in the United States remains at a persistent 9.5 percent, and in July the U.S. shed 131,000 jobs. Not exactly the type of news that supports a strong recovery or growth story. As discussed in a recent Wall Street Journal article , some large and very prominent investors are conditioning their investors and structuring their portfolios for deflation. PIMCO's Bill...