Before you break out the Champagne…͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
| |  | | May 18, 2024 | | More Articles | Free Reports | Premium Services Saturday Round Up | Managing Editor’s Note: Inflation was the talk of the town this week (again). Charles always has a lot to say about this, all of it valuable… so I’m going to let him talk to you directly today.
- Teresa B. | | | Hello, Fellow Navigator.
Well, that might not have gone quite as planned.
Secretary of State Antony Blinken ruffled a few feathers by taking out his guitar and rocking out to Neil Young’s “Rockin’ in the Free World” with a local band in Ukraine. It was viewed as a cheap publicity stunt.
I disagree.
Look, I’m happy to run Blinken and every other living secretary of state of the past 40 years through the woodchipper. They’ve managed to make one mess after another for as long as I can remember.
Maybe the world would be a better place if, like Blinken, they had all spent more time playing the guitar and less time tilting at diplomatic windmills and finding new and exotic ways to make the world a worse place.
I have a modest foreign policy proposal. Let’s form a band! Blinken is our guitar axe man. Former Secretary of State John Kerry also enjoyed a brief career as a rock guitarist. He can be our rhythm guitar. We can even pull Bill Clinton out of retirement and put him on the tenor saxophone. I don’t know a thing about freshman congressman Maxwell Frost of Florida, but he’s rumored to be a decent jazz drummer. Let’s add him to the band too. And if we need someone on the keyboard, we can get former Utah Governor and ambassador to China John Huntsman to join the band.
I don’t know that this motley crew would sell many records. But at least they’d be distracted enough not to do any real damage.
Moving on to more serious matters…
Inflation is done.
Mission accomplished.
The Federal Reserve slew the dragon.
It’s nothing but smooth sailing ahead.
Ahem…
There’s nothing like sarcasm to drive a point home.
Consumer price inflation declined in April, dropping to 3.4% from 3.5%. Core inflation, which excludes food and energy, dropped to “only” 3.6%.
That was enough to get Wall Street excited… and reignite hope that the Fed will start cutting rates by the end of summer.
But don’t break out that Champagne yet.
For starters, core inflation – read your weekly grocery bill – is still stuck at 3.6% and isn’t trending lower.
Pick any way you want to measure inflation, and it’s going to tell you the same story. Inflation stopped falling late last year and has been grinding sideways ever since. Getting excited about a decline of a whopping tenth of percent is truly ridiculous.
A 3.6% core inflation rate is also nearly double the Fed’s stated target of 2%. It’s enough to lead to a doubling of prices every 20 years.
And yet…
Every major stock index is now hitting new all-time highs in the belief that this ever-so-modest decline in inflation will be just enough to convince Fed Chair Jerome Powell to cut rates in September instead of November or December.
This is a case of desperate investors so intent on seeing if they could that they don’t stop to think if they should!
I don’t see inflation trending lower while our government is running a budget deficit of over 6% of GDP and retiring Baby Boomers are creating a labor shortage.
The Fed would be wildly irresponsible to cut rates with inflation still running this hot. (But hey, when has responsibility ever been their thing?)
Still, that’s just the tip of the iceberg.
Let’s go more fundamental. If your investment strategy depends on guessing the precise date the Fed lowers interest rates by that all-important 0.25%, you’re doing it wrong.
That’s not a game you can win. You have no edge.
Even if you had Powell’s office bugged, I don’t know how useful it would be, because I don’t believe the man himself knows what he’s going to do next… or when he’s going to do it. It’s been obvious for two years now that he’s just making it up as he goes.
Instead, stick with investment themes that actually make sense and that have a longer runway: artificial intelligence, infrastructure, energy… I could list out half a dozen investment themes that will continue to run regardless of what the Fed does.
Let Wall Street do what it’s going to do – which, for now, means handicapping the Fed’s next move – while we focus on investing to ensure our financial security.
In short, stay the course and keep reading The Freeport Navigator.
Here’s what we discussed this week…
| | May 13, 2024 America’s largest companies have rediscovered the virtue of thrift… and expectations were already so bad that beating them was a cakewalk! But their fear of recession could very well bring about what they fear. What’s going on here? Read here to find out. |  | | | SPONSORED Until today, we’ve only seen this happen twice in the history of the stock market. But now: Huge payday opportunities are happening every single week!
Click here now to see how you can profit from this rare moment in stock market history. |  | | | May 15, 2024 It wasn’t that long ago that the sun never set on the British Empire… or that Spain was the richest country in the world… or that the Ottoman Empire was a wellspring of art, science, and medicine. Every empire falls… eventually. Unfortunately, it looks like the time of the U.S. Empire has come. Read on for the details. |  | | | SPONSORED Crypto pioneer Charlie Shrem has an uncanny knack for spotting the biggest winners, like on Steem, Cindicator, and as much as the 200,000% he made on Bitcoin. Now, he says, there are five coins you must take a look at right away.
Click here to see the details. |  | | | May 17, 2024 As utterly obnoxious as meme-stock culture is, with diamond-handed bros trading the “stonkmarket,” it’s fun to trade… if you do it right. Here’s what you need to know. |  | | Looking Ahead Buckle in because next week has the potential to be a wild ride. Nvidia (NVDA) – the most popular play on AI – reports quarterly earnings on Wednesday.
There’s a lot of bullish sentiment priced into Nvidia’s shares. At a price/earnings ratio of 79, the stock is priced for perfection. So, anything short of that – any indication that the AI arms race isn’t accelerating at quite the breakneck speed it was – could be bad news for Nvidia and for the broader market.
Long term, I’m wildly bullish on AI. We need AI to alleviate the worker shortage brought on by the retirement of the Baby Boomers. This intersects two of my favorite long-term investment themes in The Freeport Investor: Exponential Progress and the Rebuilding of the American Industrial Empire.
That said, there is a price at which even the best growth story no longer makes sense. So, I’ll be picking through Nvidia’s earnings release with a fine-tooth comb.
I also expect the usual dull roar from the Fed. We have at least eight scheduled speeches by Fed board members, and the minutes of the May meeting will be released.
So, in a market in which every wink and nod by a Fed board member seems to correspond to multiple hundred point moves in the Dow, I expect next week to be a wild ride.
To life, liberty, and the pursuit of wealth, |  | | Charles Sizemore
Chief Investment Strategist, The Freeport Society P.S. Every AI company that has reached a $1 trillion market cap has showered its investors with wealth-building opportunities. Our Freeport Society friend and Global Macro specialist Eric Fry believes he has found the next one. It’s a company that’s using a new application of AI and he believes it will revolutionize a $13.1 trillion industry. He’ll share more details during a special strategy session scheduled for Tuesday, May 21 at 7 p.m. Eastern. You can reserve your spot for that strategy session by going here. | | |
No comments:
Post a Comment