PPI Is the Real Inflation Surprise
A real shock was experienced in CPI in producer prices. PPI fell by 0.5% in March, and the annual growth rate fell from 4.9% to 2.7%, the lowest since Jan 2021, but more importantly, it is close to the last 20 years’ average.
The market is celebrating the gap between expectations and reality by investing in riskier assets and ignoring the US dollar. The Federal Reserve is expected to leave rates unchanged in May with a 40% chance of that happening.
The focus of the Fed is now on wages and prices in the service sector as the problem continues to recede. The only solution for this problem is a slowdown in economic growth. The expected moderate recession this year may cause the Fed to tighten monetary policy, contrary to market expectations.
Based on the latest CPI and PPI data, we can notice signs of inflation and rising production costs, which may have a negative impact on certain industries and companies, particularly those highly dependent on raw materials and energy. In this case, investors may take some measures to mitigate the risks, such as:
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Avoiding stocks of companies that are more vulnerable to fluctuations in raw material and energy prices, and considering those that are more versatile and adaptable.
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Investors may consider allocating a portion of their funds to fixed-income securities to protect their investment portfolios from fluctuations in the stock market.
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In addition to stocks and fixed-income securities, investors may also consider investing in other asset classes, such as alternative investments and commodity futures, to help balance their portfolios and mitigate inflation risks.
In summary, while CPI and PPI data may have a negative impact on investments, investors can ensure the relative strength of their investment portfolios by properly diversifying their risks and avoiding companies that are susceptible to price fluctuations.
In summary, while CPI and PPI data may have a negative impact on investments, investors can ensure the relative strength of their investment portfolios by properly diversifying their risks and avoiding companies that are susceptible to price fluctuations.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Zipperlips : Scared to death would have been a better answer for me. I don't know why people can't see through the giant smoke screen? The numbers are doctored, and here lately, if their lips are moving, their lying! We don't just face a recession. We're facing a depression. When we bought our house in 21, they were still giving out home loans for 3% down, and I haven't heard that reported once. You had Zillow out there buying up properties and setting their own appraisals , not to mention they would have an appraisal on their website, the house would get listed 100 K higher, and they would instantly change the appraisal to the new number. To make matters worse, most of the industry was using their numbers because they were too lazy to produce their own. It was one big giant conflict of interest. The in fighting in our government has reached epic proportions that I never believed that I would see in my lifetime. I continue to drop to my knees each night to ask that someone step forward with some real solutions that could make a real difference. It's not too late for them to turn away from the lies and misleading the citizens who they are there to provide a voice for. If the Left somehow gets Gavin Newsom in office after Mr. Biden, I'm terrified that our civil liberties will disappear. One just has to look at the facts of what has taken place at the People's Republic of California, starting with San Francisco and then carrying on to the mass exodus of the state when he became governor. For the record, "I mean no disrespect, and this was not meant to be a political rant. It's simply that I see some giant trouble coming for this country if this were to play out. " Happy trading to all