Welcome back to Trading Opportunities! This week, we’re looking at inflation’s impact on investments and assets… the rising cost of gas… and Chinese investment risks.

Enjoy our predictions for the week ahead, and on Friday, we’ll be back with our trading research service, Strategic Trader, and about how you can gain access to those recommendations.

Until then, here’s what we see ahead for this week…

Hedging Assets Amid Rising Inflation, Wages

U.S. wages and salaries are up 1.5% in the third quarter and job vacancies are still near all-time highs. The headline that many traders took from that news late last week was that inflation is rampaging.

There is some truth to that. Inflation tends to come from rising wages and commodity prices. However, investors seem to have forgotten that rising wages are more closely correlated with a strong housing market and increased retail spending.

Guaranteed Instant $$$ Payout — No Matter What

We think some undervalued homebuilders — KB Home (NYSE:KBH) and Hovanian Enterprises, Inc. (NYSE:HOV) — or builder supply companies like Builders FirstSource, Inc. (NYSE:BLDR) are a great buy right now, despite rising costs. Retail stocks like Target (NYSE:TGT), Costco Wholesale Corporation (NASDAQ:COST), and Walmart, Inc. (NYSE:WMT) could be ready to break resistance (prior high share prices established earlier this year) and jump another leg higher before the first quarter of 2022.

We should worry about inflation, but as long as growth is positive, then increased spending likely will offset it. Keep in mind that stocks (like real estate) are an inflating asset, so market exposure is a great hedge.

Earnings Recap

Earnings per share are up 38% and revenues are up 15% compared to last year so far with half the S&P 500 reported as of Friday. Like last quarter, those companies in the S&P 500 that have already reported in October are up 5.69% over the past 30 days, compared to 8.3% for those that have not reported yet. That means traders are taking profits after earnings reports like they did last quarter. We expect the best-performing fundamental companies to bounce back, but we recommend waiting until after the report to pick up any new positions.

The Secret Ingredient Behind My Biggest Stock Picks

Big reports that we think will provide some insight into the market:

• Clorox (NYSE:CLX) Monday after market close (AMC): Consumer stock, insight into supply chain issues.
• Public Storage (NYSE:PSA) Monday AMC: Demand for retail storage units and RE stocks
• ConocoPhillips (NYSE:COP) Tuesday before market open (BMO): Energy sector outlook
• Under Armour (NYSE:UA) Tuesday BMO: Retail spending, consumer demand
• Pfizer (NYSE:PFE) Tuesday BMO: Outlook for healthcare and vaccine stocks
• Square (NYSE:SQ) Thursday AMC: Retail spending outlook and Fintek

Consumers Feeling the Pinch of Rising Gas Prices

The Biden administration is blaming OPEC for high gasoline prices, and with good reason. The Organization of Oil Producing Countries, or OPEC, declined to move forward with an increase in oil production this month, which spells pain at the pump for consumers. This issue could come to a head in December and January if prices keep climbing. The bright side is that this is likely good for refiners and midstream companies like ConocoPhillips (COP), and Phillips 66 (NYSE:PSX) could bounce off early support near $75 per share after blasting past their earnings estimates last week.

The World’s Most Powerful Stocks

China’s Debt-Laden Developers

China Evergrande Group and its overleveraged peers are still staring down the barrel at hundreds of millions in debt payments that must be made this month. Just last week, Evergrande narrowly avoided defaulting on a loan and must do the same this week with a hefty payment. The company now owes $338 million in offshore coupon payments by the end of the year. We are watching this closely for any possible impact it may have on U.S. markets. However, for now, borrowing costs in China are skyrocketing and that makes any Chinese tech, energy, or retail a no-go for buyers even if prices are incredibly low.

We’ll be back with you on Friday.

Until then, if you have any questions, please contact your Customer Service team at feedback@investorplace.com.

Sincerely,

John Jagerson & Wade Hanson,

Editors, Trading Opportunities

P.S. If you’ve tried options investing in the past without success, a free presentation from a 20-year trading pro shows you the #1 thing 99% of beginners do wrong… and how get instant cash payouts upfront, like $1,480… and $2,475 each time you make a trade. Free details here.