Worried about inflation?

To be honest, you should be.

Worried About Inflation? Are you worried about inflation right now? You should be. The CPI came out yesterday morning, and it was a 40-year high, coming in at 9.1% yearly. If you look at month-to-month it was up 0.7%, and if you remove the food and energy (Core CPI) it was 5.9%, which tells you that not only food and energy are higher, but almost everything else. This will probably keep many summer vacationers from either going on their annual trip to the beach or mountains, or they will shorten it. Lodging is higher, gasoline higher, food is higher, and even eating out is higher, and these are the core parts of any great vacation. One good thing that might come out of this is the inventory that retailers acquired because of the pandemic. Many people were at home for an extended period of time and ordered many different types of items. Retailers bulk-ordered many items in anticipation of more demand and have more inventory than they need. This is because of overstocking, and some things are out of style or do not have the latest upgrades. Since inflation has driven many away from retailers and the inventory is too high, retailers may be putting items on discount just to relieve the inventory. So, Christmas may not be so bad after all. Along with inflation, interest rates have been rising too. Higher rates cost more for loans on houses, cars, and businesses. This tends to slow the economy. But with higher rates in the US, our dollar has become the currency of favor. The Euro has dropped to "parity" with the US Dollar. This means that for every US Dollar you get one Euro, so it is one for one right now. That is cool if you want to travel to Europe because the US Dollar will buy more now; however, that also means that it takes more Euros to purchase our goods. In fact, it takes most foreign countries more of their currency to purchase US goods.

Now I know what you are thinking, the US is a service country and not a manufacturing country so that won't hurt much. Tell that to the farmers and ranchers that export their beef and crops. Back in 2020, wheat was trading at around $4.80; in two years it tripled in price up to $13.63 a bushel because of inflation and the Ukraine war. But then the US Dollar began to strengthen and since then wheat has dropped back to $8.15 per bushel. Not only do we have more wheat but there is less global demand for it because it is too expensive and foreign countries can go elsewhere to get it. If you look at most commodities, this is the case. With the slowing of consumer buying and the rising dollar, maybe we found a way to cure our own inflation. Only time will tell. Trade to Win! Geof Smith and The DTI Team P.S.: Even while the broad market has been tanking, me, TBUZ, and our team have found a trading strategy set to outperform the S&P by over 50% this year. We've still got a few spots left in TBUZ's All-Star Portfolio, so if you haven't seen heard about it yet, check out last night's WOW to learn more.

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