Is there a silver lining to the woes of inflation?


Inflation seems to be getting worse rather than better, which will affect the market in the short term. It’s not all bad, but some stock sectors do better than others when inflation (and interest rates) rise.

Source: g0d4ather /

That said, some do worse. It’s a big week for inflation reports with the Core Personal Consumption Expenditure (PCE) Price Index and Bureau of Labor Statistics (BLS) Labor and Unemployment reports due yesterday and today. today, respectively.

The PCE is tracking the pace of consumer goods price increases, and on Thursday those numbers were in line with estimates that included a 6.4% increase over the past year, the biggest jump since 1983. The Fed will be watching this number, among others. , to adjust interest rates. This will be a good indicator of the performance of defensive consumer stocks – food, beverages and other household products – and whether they are good buys.

According to the BLS, the unemployment rate fell from 3.8% to 3.6% and the American economy created 431,000 jobs. Wages rose slightly, continuing the trend for hourly compensation to rise 5.6% over the past year. So many positive factors that are helping to curb inflation for the time being.

We’ll let you know which trends are on our watch list in this week’s recap.

Monday’s livestream: what to watch as inflation worsens

Last week, we warned of volatility after Fed Chairman Jerome Powell gave speeches on Monday and Wednesday. This volatility followed to some extent; however, the market was quite stable and this behavior continued this week. The swings have been linked to inflation, and economic fundamentals outside of inflation are currently quite positive.

Wage growth, falling unemployment rates and low interest rates are keeping inflation at bay — for now.

Expect the Russian-Ukrainian war to be a bit of a wild card, but we hope to see improvement on that front. The pressure on the energy market is certainly having an impact on inflation.

We continue to see the curve flatten between 2 and 10 year Treasury yields. When these values ​​reverse, it is one of many factors that can signal an economic downturn.

Conclusion: Real estate, commodities and financials tend to do well in inflationary environments. If inflation continues to rise and economic/wage growth is flat or negative, avoid tech stocks, which tend to underperform in inflationary environments.

Wednesday: Mega-Cap Stock Splits Are Just What We Need

The S&P’s massive growth over the past decade has been largely driven by mega-cap stocks like Alphabet (NASDAQ:GOOGLNASDAQ:GOOG), Amazon (NASDAQ:AMZN), and You’re here (NASDAQ:TSLA)who have experienced meteorites share the prices. Shares of these stocks have been largely out of reach due to their exorbitant prices, but can have lucrative returns for investors even when individual stocks are “split”.

But this week, some mega-cap stocks announced they would allow stock splits, which divide individual stocks among investors, making them much more affordable.

While that might sound a bit scary to shareholders, the company’s total market remains unchanged – there’s still plenty of value to be had. If you’ve ever been interested in these stocks but thought they were out of your price range, now is the time to add them to your portfolio.

GOOGL and AMZN announced plans for 20:1 stock splits this year. Based on current prices of $2,842 for GOOGL and $3,338 for AMZN, these splits would bring the price of these shares down to $142.10 and $166.90, respectively. It’s much more affordable, isn’t it?

Last Night’s Livestream: Are Meme Stocks Like GME, AMC & BBBY A Buy?

Meme actions like GameStop (NYSE:EMG), AMC Entertainment (NYSE:CMA), and Bed bath and beyond (NASDAQ:BBBY) launched higher last week but has started to fade over the past few days. So what does this tell us?

These stocks tend to indicate the level of risk that traders are willing to put back into their portfolios. Specifically, the resurgence of these stocks tells us that traders are willing to take on more risk in search of bigger returns.

With traders no longer receiving bond returns, there aren’t many attractive options for generating returns in your portfolio. As most know, if we’re going to stay in a high inflation market environment, holding a lot of cash won’t do you any favors.

With each passing day and rising inflation, the purchasing power of your money diminishes. We see fund managers trying to deploy these funds somewhere, which brings us back to the same actions. For more on those same stocks as well as our analysis of the S&P 500, falling VIX and rising Treasury yields, Click here to watch a replay of last night’s livestream.

Recent wins

With the first quarter of 2022 already over, we wanted to take the time to look at the profit opportunities our readers have on Strategic trader had the chance to see.

On average, our readers had the opportunity to score 4.38% per trade (we executed 34 trades this quarter), holding positions for an average of 19 days.

Of these 34 professions, we have seen zero loser…and that’s damn fantastic for the volatility of the last three months.

And we’re excited for what Q2 will bring – we hope you are too. Click here to find out how to reach us at Strategic trader.

Don’t forget to catch our live streams twice a week Mondays and Thursdays at 7:00 p.m. EST on YouTube.

We will be back with you next week.

Source link


Comments are closed.