In a recent Wall Street Journal survey conducted with NORC at the University of Chicago, 83% of respondents described the state of the economy as “poor or not so good.” According to the report, that is “the highest level of dissatisfaction since NORC began asking the question every few years starting in 1972 as part of the General Social Survey.”
The main culprit for dissatisfaction? Inflation.
High inflation has been a topic of concern since the end of last year. With inflation still sitting at decade highs, Americans are feeling the pinch.
As we’ve covered, the main reasons for these record numbers remain action from the Federal Reserve, ongoing supply chain issues and the Russia-Ukraine war.
Just this morning we had our monthly pulse check on how inflation is faring when the most recent Consumer Price Index (CPI) numbers were released. So, in today’s Market360, we’ll take a look at today’s CPI report and review the best place to put your money in this inflationary environment.
Inflation Continues Higher
This morning’s CPI report for May came in much higher than expected.
Specifically, the Labor Department reported CPI rose 1% in May and accelerated to an 8.6% annual pace in May, which is the highest level of inflation in over 40 years (since December 1981). The core CPI, which excludes energy and food, rose 0.6% in May and is now running at a 6% annual pace.
This is 0.3% higher than April and higher than the previous peak of 8.5% in March.
If you are looking for a silver lining, the core CPI decelerated slightly from the 6.2% annual pace in April.
However, many details in the CPI report remain shocking. As an example, food prices rose 1.2% in May and have risen 10.1% in the past 12 months. Energy prices surged 3.9% in May and 34.6% in the past 12 months, led by gasoline that rose 4.5% in May and 50.3% in the past 12 months.
Also notable is that fuel oil soared 16.9% in May and 106.7% in the past 12 months!
The bottom line is that inflation did not peak in March, as I had earlier hoped. This means that in the current inflationary environment, companies profiting from inflation, like energy, fertilizer, food and shipping stocks, remain an oasis for investors.
Energy Stocks Remain a Buy
It’s why at Growth Investor we’ve been loading up on stocks that do well in the inflationary environment. One sector of the market that continues to hand out wins for us is oil and energy. The fact is they have accelerating earnings momentum at a time when earnings momentum is slowing for many S&P 500 companies. FactSet recently reported that analysts have lowered second-quarter earnings estimates for seven of 11 sectors, but analysts have upped energy earnings estimates by a whopping 29.4%.
Here’s the reality: Oil is king, and I predict it’s going to remain king for at least the next two decades. Right now, we’re at the start of a new, inevitable oil bull market. The staggering price moves in oil bull markets make them truly phenomenal opportunities.
It’s why I released a new special report called 5 Stocks for the New Oil Age. In this report, I review the three catalysts that will keep oil prices surging and reveal the five best oil stocks that can protect your portfolio in the coming years. (For details on how to gain access to this report go here.)
The fact of the matter is my Growth Investor stocks continue to profit from inflation, and they should remain an oasis in the current chaotic environment. If you want to position your portfolio to prosper, join me at Growth Investor today. You’ll have full access to all of my recommendations, as well as my Weekly Updates, Monthly Issues, Special Market Podcast, special reports, and much more.
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