Phew! After a near-agonizing wait, December’s all-important Consumer Price Index (CPI) report hit the tape this morning – and it was softer than expected. With that data pointing toward easing inflation pressures, stocks got the fuel they needed to begin ripping higher. Of course, some market pundits will call this rally a “head fake” or a “dead-cat bounce.” But we believe it’s the real deal… meaning stocks are set to soar over the next few weeks. That’s because, ever since COVID-19 emerged nearly five years ago, inflation has been the markets’ primary driver. And today’s CPI report confirmed that driving force is now moving in the right direction once again. That is, in times of tame inflation – like during 2021, ‘23, and ‘24 – the markets have soared. Indeed, during those years, the S&P 500 rallied more than 20%. Meanwhile, in 2022, when inflation was a big problem, the market suffered one of its worst years in recent history. Back then, the S&P sank nearly 20%. Point being: Inflation has driven the stock market over the past five years. When inflation has contracted, stocks have soared. When it has risen, stocks have struggled. What We're Gleaning From December's CPI Data In late 2024 into early 2025, inflation was moving in the wrong direction. The headline CPI rate rose in October and November, while core CPI didn’t budge. Inflation had stopped its ongoing decline. And the market responded by paring back rate-cut bets and pushing up Treasury yields – the sum of which weighed on stocks. But today’s CPI report indicates that inflation is becoming a positive impetus for markets again. Now, the headline CPI rate did rise in December, but the rate of change was less than recorded in October and November. Meanwhile, core CPI actually dropped for the first time in several months. And in fact, it’s expected to drop again next month, too. Clearly, it appears that inflation is turning a corner and resuming its decline. This is evidenced by the report’s categorical breakdown, which shows that most measured areas are in decline right now. Of the six major categories in the CPI report – Food, Energy, All Other Commodities, Shelter, Medical Care Services, and Transportation Services – only one rose significantly in December. The rest either reported falling or flattish inflation rates. Energy – the one group that did report a big rise in inflation – is currently in deflation mode, with a -0.5% rate. So, in our view, a rise there should simply be construed as a return to normal. In other words, it seems that inflation is moving in the right direction once again. Unsurprisingly, so are stocks. Recommended Link | | In May 2024, Legendary Wall Street money manager Louis Navellier predicted that Trump would win and trigger a massive boom. He was right! Just in the first week after Trump’s win, many stocks jumped by double and even triple digits. But now he’s issuing this NEW warning about Trump’s inauguration. | | | The Final Word on the Latest Inflation Data After a rough December – and equally rough start to 2025 – the stock market is surging higher today. The move looks technically significant, with the S&P 500 bouncing strongly off the bottom side of its 2024 uptrend channel and its 100-day moving average. To us, this looks like the start of a big leg higher for the markets. That’s why we’re telling our subscribers that it is time to buy into this stock market rebound. For the first few weeks of the new year, we were stuck in a “holding pattern.” Now, though, we’re ready to jump back into the action and join this rally with some new recommendations. To help us find some of the best stocks to buy for this rebound rally, we’re turning to Elon Musk – the world’s richest man – and his startup, xAI. We’re confident that firm has the opportunity to become a major winner in this next phase of the AI Boom. And while it’s not yet publicly traded, we’ve found a promising ‘backdoor’ way to invest in the company. Learn more about xAI and its portfolio-boosting potential now. Sincerely, |
No comments:
Post a Comment