Before we dive into the big economic reports, I wanted to thank everyone who joined us yesterday at the $50k Cash Comeback event. We certainly had a lot to talk about!
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If you missed it, you can find the replay of the event here.
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Now let’s discuss this week’s economic data.
There is no way to sugarcoat it…
I didn’t like any of this week’s economic news, period.
And based on the multiple market selloffs over the past three days, investors didn’t like them either.
But even though the economic news isn’t what we wanted to hear, there is a silver lining in certain stocks.
In today’s Market 360, we’re going to review this week’s economic reports, namely the Consumer Price Index (CPI) for January, January’s retail sales, and the Producer Price Index (PPI) for January.
Then I’ll share the best stocks to own right now as the market continues to digest the data…
This Week’s Economic News
We received three big reports this week: January CPI on Tuesday, January retail sales on Wednesday and the January PPI yesterday… here’s what we learned:
Consumer Price Index (CPI)
The CPI rose 6.4% in January compared to last year – higher than economists’ expectations of 6.2%. The core CPI (price of all goods and services, minus food and energy) increased 0.4% in January and is up 5.6% in the past 12 months.
Food and energy prices resurged in January, up 0.5% and 2%, respectively.
But what I was most interested in seeing was the increase in Owners’ Equivalent Rent (OER) – as it accounts for half of the CPI.
Unfortunately, OER was up 0.7% in the month of January. So, whatever is going on in the real estate market right now – specifically the decrease in home prices – isn’t showing up in OER.
January Retail Sales
The January retail sales reinforced what Tuesday’s CPI report shared: The costs of everything rose.
Retail sales rose 3% in January, higher than the 1.9% Dow Jones estimate.
Food services ranked the highest increase, coming in at 7.2%. Motor vehicle and parts dealers increased 5.9%, and furniture and home furnishing rose 4.4%.
It’s important to note, these numbers are not adjusted for inflation. That means consumers outpaced the 0.5% inflation rate for the month.
Producer Price Index (PPI)
The PPI – the measure of what producers pay for goods and services – rose 0.7% in January, compared to the 0.4% rise expected. That is the biggest increase since June 2022.
Year-over-year, the PPI increased 6%.
The higher PPI reading came in due to a 5% rise in energy costs. About a third of the rise came from the gasoline index going up 6.2%. The demand index for goods climbed 1.2% – this is the biggest one-month increase since June 2022. It’s worth noting that there was a 1% decline in food.
Many economists are attributing the January inflation increase to seasonal factors. An unseasonably warm winter may have played some part as well…
The fact is, inflation has declined for seven straight months, but the rate of decline is starting to level off, and that’s disappointing. It means we could remain at elevated levels for longer than we hoped. In addition, the retail report tells us that consumers are still spending – even while inflation is at record levels.
This gives the Federal Reserve more reason to continue raising key interest rates to curb inflation.
How To Plan for What’s Next…
I don’t have a crystal ball, but I anticipate the Fed to continue its rate hikes following this week’s data.
After the PPI release Thursday morning, Cleveland Fed President Loretta Mester said:
My expectation is that we will see a meaningful improvement in inflation this year and further improvement over the following year, with inflation reaching our 2% goal in 2025.
She is further calling for a 50-basis-point hike at the next meeting. While she doesn’t vote in the Federal Reserve Open Market Committee, she still has influence. And she’s likely not alone.
Wall Street was hoping for weak economic news – they didn’t get it.
As a result, the major indices closed down on Thursday, with the S&P 500, Dow and NASDAQ falling 1.4%, 1.3% and 1.8%, respectively.
But hang in there, folks. Earnings are working, with tanker and energy companies leading the pack.
Just look at my Accelerated Profits Buy List pick Tenaris S.A. (NYSE:TS).
Tenaris soared out of the gates on Thursday following the company’s fourth-quarter earnings announcement. Fourth-quarter earnings jumped 118% year-over-year to $1.37 per ADS, up from $0.63 per ADS in the same quarter of 2022. Fourth-quarter sales increased 76% year-over-year to $3.62 billion, topping estimates for $3.49 billion.
For fiscal year 2022, Tenaris reported earnings of $4.33 per ADS on $11.76 billion in sales, or 133% annual earnings growth and 80% annual sales growth.
Company management noted that earnings reached a record high in 2022, thanks in part to increased sales and the strong recovery of drilling for oil and natural gas in the Americas.
Tenaris stock closed more than 6% higher yesterday, while the rest of the market was pulled back.
Right now, your best defense remains a strong offense of fundamentally superior stocks. Companies like the ones on my Accelerated Profits Buy List. Stocks that can help you pull consistent money out of any market.
To learn more about how to generate massive income with my Accelerated Profits stocks, click here.
Sincerely,
Louis Navellier
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Tenaris S.A. (TS)
