Morning Brief – March 16, 2022

Inflation could get worse before it gets better.

In fact, the last time we paid this much for food and energy, it was 1981. 

Nowadays, most of us are struggling with the Consumer Price Index jumping 7.9% in February – its biggest jump since January 1982, according to the U.S. Labor Department.  Also, according to Moody’s Analytics, the average household is paying an additional $296 a month.

The Producer Price Index was up 10% year over year.

To help cool that off, the Federal Reserve is expected to hike rates a quarter point this week.

That’s pretty much a given.

What we’re concerned about is what comes next.  We need some indication as to how quickly the Fed will raise interest rates.  Sure, we need higher rates to combat sky-high inflation.  But at the same time, the Fed doesn’t want to tip the economy into recession.

We also have to consider that inflation could get worse before it gets better.

For one, it’ll take some time for Fed action to curb inflation.  Two, there’s uncertainty regarding the war in Ukraine, which has had a big impact on oil and gas prices.

Three, “When the Fed does lift rates, it’s also likely that people will see the downsides of those increases before any improvement on inflation,” said Tara Sinclair, a senior fellow at the Indeed Hiring Lab, as quoted by CNBC.

“Basically, that means consumers may have to pay more to borrow money and still see higher prices at the gas pump and grocery store. That scenario is particularly tough on low-income workers, who have seen wages rise but not keep pace with inflation,” added CNBC.

So, how do we protect ourselves from further inflation?

One way is to invest in high-yielding stocks that are insulated, like Kinder Morgan (KMI).

After all, Kinder Morgan is one of the largest infrastructure companies in North America.  It owns and controls oil and gas pipelines and terminals.  With a dividend yield of 6.24%, the company recently said “it was budgeting a 3% dividend boost this year,” according to Barron’s.

The company also continues to be one of the most stable, with enough cash cover its dividend.

Markets

  • The Dow is up 374 points to 33,801
  • The S&P 500 is up about 54 points to 4,307
  • The NASDAQ is up 247 points to 13,696.50
  • Gold prices are up $8.20 to $1,926.23
  • Bitcoin is up about 5% to $40,537.41
  • Oil prices are up slightly to $96.49
  • The VIX is down 3.23 points to 28.52

 

Trading Tips

The pandemic is getting worse – again.

While COVID tensions cooled in the U.S. that may not be the case for much longer.

In fact, experts are warning the U.S. could see another spike in cases, with some wastewater samples showing an increase in infections.

According to the U.S. CDC, as noted by People, “The U.S. is also starting to see an increase of COVID-19 in wastewater samples, a strong early predictor of when the virus is about to spike. Between Feb. 24 and March 10, the presence of COVID-19 increased by 100% or more in 37% of U.S. wastewater sites, according to the Centers for Disease Control’s tracking system.”

Read more here. 

Insider Buying – Workhorse Group (WKHS)

After plummeting from $18 to about $2.50, shares of WKHS are showing some signs of life.  An insider has also been buying.  In fact, between March 11 and 14, the VP of Business Development, Stanley March bought a total of 50,000 shares at an average price of $3.31.

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