EarningsBeats.com Digest for May 9, 2022
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Top 10 Stock Picks: Sneak Preview
Monday, May 9th at 4:30pm ET
About the Event: Join Tom Bowley, Chief Market Strategist as he discusses what will be covered during the Top 10 Stock Picks webinar on Thursday, May 19th. This discussion will include a review of the results to date for the Model, Aggressive, Income, and Strong Accumulation/Distribution (AD) portfolios.
This is a FREE event that is open to all of our newsletter subscribers, including YOU! You will receive room instructions later today. The session will be recorded for those unable to attend live. We hope to see you there!
Inflation May Have Peaked, Watch This Week
The Federal Reserve is raising the fed funds rate in an effort to curb core inflation, which has moved from the Fed's target rate near 2% a little over one year ago to last month's reading of 6.44%. The recent negative GDP for Q1 is evidence that our economy is slowing - and that helps to reduce demand, effectively lowering the upward price
pressures. When the monthly CPI comes out each month, it replaces the monthly reading from a year earlier. The chart below shows the monthly core CPI readings for the past 3 years. The bottom panel shows the annual rate of change (ROC):
I've circled the 3 very steep monthly increases from April 2021 through June 2021. We had tremendous post-pandemic demand at that time, while simultaneously dealing with supply chain issues. This combination resulted in rapidly rising prices and a HUGE spike in the core CPI. The April 2022 CPI report will be released on Wednesday of this week and the current expectation is for core CPI to increase just 0.4%. That will replace the April
2021 monthly core CPI increase of 0.9%, lowering the annual rate of core inflation by 0.5%. Historically, growth stocks perform well when inflation peaks and begins to roll over. So it'll be very interesting to see what happens in the second half of this week with respect to growth stocks. Do they start to show relative strength vs. value stocks? If so, then a market bottom could begin to form.
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Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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