The market soared this morning, and we can thank the November Consumer Price Index (CPI) reading for the strength.
The Labor Department announced that the CPI rose less than expected in November. CPI increased only 0.1% last month and 7.1% in the past 12 months, compared to economists’ expectations for a 7.3% year-over-year rise. Core CPI, which excludes food and energy, climbed 0.2% in November and 6.0% year-over-year, also lower than forecasts for 6.1%. The bottom line: consumer inflation is cooling off.
The CPI report comes on the heels of last Friday’s Producer Price Index (PPI), which showed that wholesale inflation also fell in November. Specifically, the PPI rose 0.3% in November and 7.4% year-over-year. That compares to an annual pace of 8.1% in October. Core PPI, which excludes food, energy and trade margins, also increased 0.3% in November and is up 4.9% in the past 12 months. That compares to an annual pace of 5.4% in core PPI in October.
Wholesale energy prices declined 3.3% in November, while food prices rose 3.3%. Service input prices remain stubbornly high, increasing 0.8% in November. Overall wholesale prices are falling, but high food and service costs prohibited an even larger decline last month.
With inflation slowing down, it gives the Federal Reserve good reason to think twice about continuing to raise key interest rates aggressively at its December Federal Open Market Committee (FOMC) meeting tomorrow. I still expect the Fed to hike key interest rates by 50 basis points tomorrow, but after that, I anticipate that the Fed will hold key interest rates steady for several months in 2023, at least until core inflation approaches the Fed’s 2% inflation target.
If the FOMC statement and Fed Chairman Jerome Powell’s comments are dovish tomorrow, then I believe another stunning rally could be in the cards – potentially one with enough momentum to carry through to yearend.
To prepare your portfolio for the potential rally, I recommend taking two steps today. The first is to review my latest rating changes. After taking a closer look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Portfolio Grader recommendations for 61 big blue chips.
Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and act according. I’ve listed the first 10 stocks below that were upgraded from a Hold (C-rating to a Buy (B-rating). For the full list of 61 stocks – as well their Fundamental and Quantitative Grades – click here.
|Ticker||Company Name||Total Grade|
|ADI||Analog Devices, Inc.||B|
|ARES||Ares Management Corporation||B|
|ASML||ASML Holding NV ADR||B|
|ASX||ASE Technology Holding Co., Ltd. Sponsored ADR||B|
|BSY||Bentley Systems, Incorporated Class B||B|
|CHWY||Chewy, Inc. Class A||B|
|FWONA||Liberty Media Corp. Series A Liberty Formula One||B|
|HTHT||H World Group Limited Sponsored ADR||B|
|IR||Ingersoll Rand Inc.||B|
Your second step is to watch today’s Early Warning Summit event, scheduled for 4 p.m. Eastern time on the dot. If you haven’t signed up yet, you can do so by clicking here.
During this event, I will be sitting down with my InvestorPlace colleagues Luke Lango and Eric Fry to discuss several very important topics, including:
- The big events, trends, and opportunities that will define the markets in 2022, including the truth about inflation and if another market correction is in the cards.
- The name and ticker symbols to three stocks that could soar in 2023 – absolutely free.
- And most importantly, what you should be doing with your money right now to prepare yourself financially for 2023.
If you sign up for the Early Warning Summit event now, you’ll receive a free copy of our brand-new special report: 99 Stocks to Sell Before 2023. These 99 stocks are held by millions of investors and could soon see their share price crater.
Click here to reserve your spot now. We look forward to seeing you later today!