 | | |  Good morning. Inflation is now running at a 40-year high, with a 7.5 percent annualized gain. Digging into the numbers, there have been some big month-over-month changes that show where the economy's strengths and weaknesses lie.
Among gainers, rent rose about 0.5 percent compared to the prior month, a big source of costs for renters. And owner-equivalent rent rose 0.42 percent, a way of trying to gauge the costs of homeownership. Health insurance rose 2.7 percent month-over-month, but may have been driven by annual rate increases with the start of a new calendar year. And, likely fueled by rising energy costs, air fares rose 2.3 percent month-over-month.
On the plus side, lodging dropped 3.9 percent month-over-month, and rental prices slid 7 percent month-over-month, although that may reflect a seasonal demand for holiday travel. Overall, investors in energy, and real estate appear to be the big winners when looking behind the current inflation rates, a trend likely to continue for the next few months.
Now here's the rest of the news: | | | | | |
| | |  | DOW 35,241.59 | -1.47% | | | | S&P 4,504.08 | -1.81% | | | | NASDAQ 14,185.64 | -2.10% | | | | | *As of market close | | | • | Markets sank on Thursday, with all three indices closing near lows of the day. | | | • | Oil traded flat, going for $89.96 per barrel. | | | • | Gold dropped 0.5 percent, last going for $1,828 per ounce. | | | • | Cryptocurrencies moved lower, with Bitcoin at $44,118 at the stock market close. | | | | | | | |
| | | For Better Investment Results, Find Cash Flow Kings | | | | The economy is rapidly changing. But one consistency for investors is to consider companies with strong cash flow. Any firm that can keep money coming in during good times and bad is one worth considering for the long haul.
It's even better for investors when a company finds new venues for generating cash during poor times. The pandemic created a number of opportunities for companies, with some still continuing to grow in the post-pandemic era.
» FULL STORY | | | | |
| | Insider Trading Report: PayPal Holdings (PYPL) | | | | Frank Yeary, a director at PayPal Holdings (PYPL), recently bought 4,000 shares. The buy increased his holdings by nearly 15 percent, and came to a total price of just under $500,000.
The buy came a day after the company President and CEO also bought shares, buying 7,994 shares at a cost of just under $996,000. Insiders have generally been sellers of shares at the company over the past three years, as is typical of big tech firms, but this adds to recent buying by insiders.
» FULL STORY | | | | |
| | Unusual Options Activity: ExxonMobil (XOM) | | | | Shares of energy giant ExxonMobil (XOM) have been soaring higher with rising oil prices in the past few months. One trader expects that trend to continue in the next few months as well.
That's based on the June $52.50 calls. With 125 days until expiration, 11,429 contracts traded compared to a prior open interest of 112, for a staggering 102-fold jump in volume. The buyer of the calls paid $26.55 to make the trade.
» FULL STORY | | | | |
| | • | Inflation Soars to 7.5 Percent
Consumer prices increased at an annualized rate of 7.5 percent in January, a new 40-year high. The rise came in higher than December's 7.0 percent read, and also came out slightly ahead of economist expectations. The increasing rate increases the likelihood of an aggressive move by the Federal Reserve to tamp down on inflation. | | | | • | 10-Year Treasury Yields Hit 2 Percent
The widely-followed 10-year Treasury yield finally topped 2 percent for the first time since mid-2019. The rise was fueled by a jump higher inflation rates, which increased investor expectations for more aggressive interest rate hikes. As bond yields go higher, returns can look more attractive relative to owning stocks. | | | | • | White House Unveils $5 Billion EV Charging Station Plan
The Biden administration has rolled out a plan to allocate $5 billion over 5 years for building up a network of EV charging stations. The focus will start around major highways, and is part of a broader plan to increase EV infrastructure as sales of the cars soar. | | | | • | Manufacturers Cite High Demand for Shortages
While disruptions in the supply chain have been an issue over the past year, manufacturers are increasingly reporting that high demand is creating shortages today. Companies are raising wages to retain workers, and raising prices to offset inflation, but demand remains out of whack with supply for many goods, particularly in the tech space right now. | | | | • | Microsoft Plans to Open Up Xbox Store
As part of its merger announcement with Activision Blizzard (ATVI), Microsoft (MSFT) is looking to placate regulators by opening up its Xbox store. That means the company will allow developers in the app store to have alternative payment systems, and have the same terms as on other app stores, among other changes. | | |
| | | | TOP | | | DIS | 3.349% | | | | MU | 3.291% | | | | K | 3.114% | | | | IFF | 2.866% | | | | ORLY | 2.848% | | | | BOTTOM | | | LUMN | 15.523% | | | | IPG | 8.773% | | | | ZBRA | 7.784% | | | | MSI | 6.977% | | | | PHM | 5.638% | | | | |
| | |  | | The market seems to have found a more constructive tone in the tug of war between trepidation over the Fed and the better fundamentals that we've seen in both earnings and the economic data… we seem to be playing a game of leapfrog, with everyone trying to get more hawkish about what the Fed may or may not do and monetary policy in 2022. That tends to set us up for a continuation of the rally. | | - Art Hogan, chief market strategist at National Securities, on why the recent market move higher in the past few days may be part of a longer, multi-month rally. | |
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