The inflation rate rose 0.2% in April; is the glass half empty or half full?
Today the BEA (Bureau of Economic Analysis) released the PCE (personal consumption expenditures) for April 2022. This report is the preferred inflation gauge used by the Federal Reserve as a key component to shape their forward guidance of monetary policy. Continue reading "Inflation: Is The Glass Half Empty Or Half Full?"
The Fed's preferred inflation gauge's core personal consumption expenditures price index rose 4.9% from a year ago in April, in line with estimates and a deceleration from March when the inflation gauge stood at 5.2%. While still elevated, the report indicates that price pressures could be easing a bit, as reported by the Commerce Department reported Friday.
However, the report/number excludes volatile food and energy prices that have significantly contributed to inflation running around a 40-year peak. If you include food and energy, headline PCE increased 6.3% in April from a year ago. That also was a deceleration from the 6.6% pace in the previous month. However, the monthly change showed a more marked pullback, increasing just 0.2% compared with the 0.9% surge in March. Continue reading "Stocks Rise On Slowing Inflation Report"
“The following is an excerpt from Tim Snyder’s “Weekly Quick Facts” newsletter. Tim is an accomplished economist with a deep understanding of applied economics in energy. We encourage you to visit Matador Economics and learn more about Tim. While there, you can sign up for his completely free Daily Energy Briefs and Weekly Quick Facts newsletters.”
I was asked last week, after our series on gasoline and diesel prices and how high those prices could go, my thoughts on the price of Natural Gas, and where they could go.
I have been following Natural Gas prices and Natural Gas inventories for years, so I went to my trusty charts and began to piece together a narrative.
Just this year alone, the price of Natural Gas has doubled. We started the year at $3.73 per million cubic feet (MMCF) and closed business yesterday, at $8.796 per MMCF. Here’s that
price chart:
I also looked at the inventory chart for Natural Gas from the Energy Information Agency. That chart showed me that natural gas inventories are starting to trend toward the lower end of the five-year average. Continue reading "And You Thought Gasoline And Diesel Prices Were High"
A massive amount of portfolio wealth has been destroyed throughout this bear market that continues its carnage that started in January. Except for oil stocks, there hasn't been any place to hide, as the cryptocurrency market, gold, equities, and bonds have all scummed to the mauling of the bear. The current bear market has been brutal, with some individual stocks losing more than 90% of their value, such as Peloton (PTON), Beyond Meat (BYND), Coinbase (COIN), and Zoom Video (ZM). However, even high-quality large-cap companies with growing revenues and durable business models have not been spared and have sold off 30-50%, such as Disney (DIS), Microsoft (MSFT), Adobe (ADBE), Costco (COST), and Meta (FB).
During bear markets or an extended period of a market-wide correction, investors have the unique opportunity to purchase heavily discounted stocks at a fraction of the price compared to their peaks. As history indicates, establishing long-term positions during corrections can lead to outsized gains over the intermediate and long term. As the selling pressure abates and the macroeconomic backdrop resolves, building equity stakes in high-quality companies bodes well for investors. The most recent market-wide sell-off is due to a confluence of the China Covid lockdowns, the Russia/Ukraine war, persistent inflation, and rising rates. As these macro issues resolve over time, the markets will regain their footing and appreciate higher. The current market backdrop is the exact scenario where investors should be deploying cash on hand to snap up heavily discounted merchandise.
Deploying cash into an environment where the selling is relentless and indiscriminate can be a daunting task. However, for any portfolio structure, having cash on hand is essential and in these environments is where this cash should be deployed in equities. This cash position provides investors with flexibility and agility when faced with market corrections. Cash enables investors to be opportunistic and capitalize on stocks that have sold off and have become de-risked. Initiating new positions and dollar cost averaging during these extended periods of weakness are great long-term drivers of portfolio appreciation. Absent any systemic risk; there are a lot of fantastic entry points for many high-quality large cap companies. Investors should not be remiss and capitalize on this buying opportunity because it may not last too long.
Purchasing stocks at the exact bottom is nearly impossible; however, purchasing stocks at attractive valuations in a disciplined manner over time is possible. For example, dollar cost averaging is a great strategy when anchoring down into a position with an initial sum of capital and following through with additional incremental purchases as the stock declines further. The net benefit is reducing the average purchase price per share in a sequential fashion (i.e., reducing cost basis). An example of building out a high-quality portfolio with subsequent dollar cost averaging throughput this market weakness can be seen in Figure 1.
Figure 1 – Initiating positions in high-quality companies with subsequent dollar cost averaging to lower the average purchase price over time. These long equity trades along with options-based trades can be found via the Trade Notification service
Purchasing stocks at the exact bottom is nearly impossible; however, purchasing stocks at attractive valuations in a disciplined manner over time is possible. During bear markets, investors have the unique opportunity to purchase heavily discounted stocks at a fraction of the price compared to their peaks. As history indicates, establishing long-term positions during corrections can lead to outsized gains over the intermediate and long term. As the selling pressure abates and the macroeconomic backdrop resolves, building equity stakes in high-quality companies bodes well for investors. The current market backdrop is the exact scenario where investors should be deploying cash on hand to snap up heavily discounted merchandise.
Having cash on hand is essential and in this environment is where this cash should be deployed in equities. This cash position provides investors with flexibility and agility when faced with market corrections. Cash enables investors to be opportunistic and capitalize on stocks that have sold off and have become de-risked. Initiating new positions and dollar cost averaging during these extended periods of weakness are great long-term drivers of portfolio appreciation.
Noah Kiedrowski
INO.com Contributor
Disclosure: Stock Options Dad LLC is a Registered Investment Adviser (RIA) firm specializing in options-based services and education. There are no business relationships with any companies mentioned in this article. This article reflects the opinions of the RIA. Any recommendation contained in this article is subject to change at any time. No recommendation is intended to constitute an entire portfolio. The author encourages all investors to conduct their own research and due diligence prior to investing or taking any actions in options trading. Please feel free to comment and provide feedback; the author values all responses. The author is the founder and Managing Member of Stock Options Dad LLC – A Registered Investment Adviser (RIA) firm www.stockoptionsdad.com defining risk, leveraging a minimal amount of capital and maximizing return on investment. For more engaging, short-duration options-based content, visit Stock Options Dad LLC’s YouTube channel. Please direct all inquires to
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. The author holds shares of AAPL, ACN, ADBE, AMD, AMZN, ARKK, AXP, BA, BBY, C, CMG, COST, CRM, DIA, DIS, EW, FB, FDX, FXI, GOOGL, GS, HD, HON, IBB, INTC, IWM, JPM, LULU, MA, MS, MSFT, NKE, NVDA, PYPL, QCOM, QQQ, SBUX, SPY, SQ, TMO, UNH and V.
It's important to remember that the perfect time to buy is when there's blood in the water, never has the case been more true than within the microchip industry at its current junction. With only three main players in the manufacturing and design space, a would-be investor needs to ensure that a chipmaker is managing its supply chain tactically, is in a solid geopolitically spot, and is staying ahead of the curve as it relates to both their broad strategy and most importantly, technological advancement.
While the past has taught us that American ingenuity at its finest can still be beaten, as shown by Samsung & TSMC's past leadership in the chip race, Intel Corporation (INTC) is the chipmaker to bet on as we enter the mid-2020s and is a stock that you can likely accumulate for a decade at least if this arena continues to play out as it has. Panning back to their current inferiority in the chip race, Intel's turnover and lack of government support were mainly the contributing factors in granting Samsung and TSMC's lead, allowing them to develop 5nm chips while Intel was still producing 7nm chips (quick FYI, chip advancement is measured by the density of transistors - nm stands for nanometer, this chart below is a fantastic example of microchip generations).
While this would currently place them 5 years behind the competition, Intel's new CEO, Patrick Gelsinger has a radical new plan to launch ahead of the competition; Gelsinger is positioning Intel to completely skip the next generation of chip hardware in hopes of bringing the Angstrom chip to market. It's called this because the chip has 20 'Angstrom' transistor density compared to the in-development 3 and 4nm or (30 & 40a) transistor density chips of Samsung and TSMC. Getting this to market by early 2025 as planned would boost them ahead of others within this arena by 5 years. Continue reading "Navigating The Microchip Arena"
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