Tuesday, August 15, 2023

👊The Single Factor Likely to Push Inflation Higher

Good morning. After declining for 12 straight months, inflation finally ticked higher on a year...
It's the monthly jobs numbers today and they're not going to be pretty and will be possibly the tip of the iceberg as we head into May.

Good morning. After declining for 12 straight months, inflation finally ticked higher on a year-over-year basis in July. That trend may continue. That's because one of the largest and most variable components is starting to trend higher.

That variable is rent. While they've started to decline overall, rents are still going up on a year-over-year basis. The good news? Taking rent out of CPI, inflation is largely gone. However, if inflation starts to tick higher again, we'll likely see the Fed move to raise interest rates further. And as long as rent is pushing the CPI higher, the Fed will be unlikely to cut rates.

Traders should remain a bit cautious with investing here. Inflation is down, but not out. And rising rents can slow down other parts of the economy should consumers get cash-strapped. That still leaves some places with upside potential, but it will be much more selective than buying the overall market going forward.

Now here's the rest of the news:

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MARKETS
DOW 35,307.63 +0.07%
S&P 4,489.72 +0.58%
NASDAQ 13,788.33 +1.05%
*As of market close
Markets moved higher on Monday, ahead of a big week for retailer earnings.
Oil dropped 0.9 percent, closing at $82.48 per barrel.
Gold dipped 0.3 percent, last going for $1,940 per ounce.
Cryptocurrencies traded lower, with bitcoin at $29,316 at the stock market close.

Today's TOP TIPS
Invest in the Sector Capable of Best Beating Inflation
The market may not like the fact that inflation's decline this year has started to stall out. While inflation does look likely to start showing signs of staying in the 3-4 percent range, some investments fare better than others in an inflationary environment.

The best investment for this scenario is for a company that offers a service and can raise prices far higher than inflation. It's also best if they don't have anything to physically manufacture and produce.

» FULL STORY

Insider Activity Report: Marriott Vacations Worldwide (VAC)
John Geller, President and CEO at Marriott Vacations Worldwide (VAC) recently bought 5,000 shares. The buy increased his holdings by 5 percent, and came to a total cost of $564,200.

He was joined by the company CFO, who bought 1,800 shares at a cost just under $205,000, and who increased his stake by 16 percent. These mark the only insider buys over the past two years. Company insiders have been periodic sellers of shares otherwise.

» FULL STORY

Unusual Options Activity: Nordic American Tankers Limited (NAT)
Marine shipping company Nordic American Tankers Limited (NAT) is up over 65 percent in the past year. One trader sees the potential for a pullback in the weeks ahead.

That's based on the September 15 $4.50 puts. With 31 days until expiration, 9,620 contracts traded compared to a prior open interest of 224, for a 43-fold rise in volume on the trade. The buyer of the puts paid $0.60 to make the bearish bet.

» FULL STORY

IN OTHER NEWS
Markets Bet on No September Rate Hike

Traders see only about a 10 percent chance that the Federal Reserve will raise interest rates after its September meeting. That's following the latest inflation data showing a slight uptick after 12 months of declines, and as the job market has held steady with the creation of 187,000 jobs in July.
Russian Ruble Drops to Lowest Level Since Ukraine Invasion

The Russian ruble has slid in recent months, and has no reached its lowest level since the country first invaded Ukraine last year. The Russian Central Bank ahs raised interest rates to stabilize the currency, but that hasn't been enough in the wake of sanctions by Western nations.
Mastercard Buys Minority Stake in MTN's Fintech Business

Credit card giant Mastercard (MA) is buying a minority stake in the fintech division of MTN Group, the largest cellphone provider in Africa. The fintech business is valued at $5.2 billion. The parties will disclose the share size after the deal is completed. The deal will give MTN the payment and technical infrastructure for payments throughout Africa.
U.S. Steel Rejects $7.3 Billion Buyout Offer

U.S. Steel (X) has rejected a $7.3 billion offer from ore manufacturer Cleveland-Cliffs (CLF) following the offer on Sunday. U.S. Steel reported that it has received several unsolicited offer, and that the CLF offer would not have given the company time to perform due diligence. If such a deal went through, the combined entity would be one of the four largest steelmakers outside of China.
Nikola Recalls Most Trucks

Electric truck manufacturer Nikola (NKLA) has recalled most of its trucks, citing battery-related issues. A number of EVs have had battery defects resulting in fires or other damage to vehicles. The news sent shares down 10 percent on the day, and the stock is already down 70 percent over the past year.

S&P 500 MOVERS
TOP
NVDA 6.521%
MU 6.253%
STLD 5.064%
TDY 4.951%
GNRC 4.244%
BOTTOM
FTRE 12.99%
KEY 5.017%
FITB 4.318%
CFG 3.973%
CMA 3.914%

Quote of the Day
We firmly stick with our bullish call that a 12%-15%+ [rally] in tech stocks will be in the cards heading into year-end as the new tech bull market has begun in our opinion. Rome was not built in a day, and neither will the AI ecosystem but lets be clear this build out is unlike anything we have seen since the Internet in 1995 and the ramifications are just starting to ripple through the consumer/enterprise landscape.
- Dan Ives, analyst at Wedbush, on why the growth in AI in the coming years could lead to a big rally for tech stocks, even amid the latest pullback of the past few weeks.

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