The one area of the market that may be secretly wishing for inflation — retail

Wall Street may be perceiving inflation as a stock market risk, but J.P. Morgan Private Bank's Jack Caffrey suggests there's at least one group that may be secretly hoping for it.

"I actually think most retailers would actually benefit from a discussion about inflation," the firm's equity portfolio manager said Monday on CNBC's "Trading Nation." "That might actually catalyze the consumer to actually spend sooner rather than waiting with the anticipation that it will be cheaper."

After years of deflation, Caffrey notes that the idea of somewhat higher prices could reignite excitement — a factor that's typically bullish for the group.

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"I actually think inflation might help some of the retailers actually start prompting somewhat better comparisons," he added.

It's possible big retailers reporting quarterly numbers this week, such as Macy's, Walmart and Nordstrom, could give guidance about inflation. But for now, Caffrey believes it's too early to determine if rising prices will fetch bigger profits. So he's staying neutral on the space.

But there are two areas he's confident will benefit from rising inflation.

"Certainly, financials might be beneficiaries if this leads to a higher interest rate environment or concerns of higher interest rates," Caffrey said. "It could also be helpful for the energy stocks to the extent that higher inflation is caused by higher oil [and] higher gasoline prices."


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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