[Altos Weekly Traders Edge] Why Inflation Won't Fall...Details Inside

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The trades expressed are from historical data in order to demonstrate the potential of the system. By clicking the link above you agree to periodic updates from ProsperityPub and its partners ([privacy policy]( Inflation Persists, But Economic Growth Signals Bullish Market Weekly Market Overview Hi Traders, Good news for the U.S. economy, particularly in this presidential election year, sets the stage for higher equity prices. While Federal Reserve Chairman Jerome Powell's desired "soft landing" may not materialize, a recession is unlikely. Why Inflation Won't Fall to 2%: Since President Biden's inauguration, consumer prices have surged 19% while real wages have declined. Households initially maintained spending by utilizing COVID-19 pandemic savings, but these have dwindled. Consumers now rely on borrowing and reduced spending, opting for store brands and curtailing discretionary expenses. Q1 GDP Slowdown Exaggerates Demand Drop: The 1.4% Q1 GDP growth rate misrepresents the actual slowdown in demand. Business inventories decreased, and the strong dollar, combined with Chinese subsidies, inflated imports. Both factors are subtracted from total purchases in GDP calculations. Biden's Policies and Their Impact: The administration's tariffs on certain Chinese goods haven't significantly affected imports, as China exports at a loss and other foreign suppliers can substitute. Business investment remains robust, fueled by the AI boom and Biden's infrastructure and industrial policy initiatives. Student loan forgiveness, aid to Ukraine, Israel, and Taiwan also contribute to stimulus. Immigration's Role in Growth: Immigration is boosting economic growth. Legal and illegal immigration combined have exceeded the expected employment growth rate. Labor shortages persist, especially in AI development, driving wage increases in various sectors. Housing Market Challenges: Rising labor costs, land shortages near major cities, and Biden's energy regulations have increased the cost of building a new home by $31,000. Despite high mortgage rates, home prices are climbing at an annual rate of 7.2%. Growth with an Asterisk: While the U.S. economy is projected to return to a growth path of about 2%, inflation will likely remain above the Fed's 2% target. Goods vs. Services Inflation: Headline inflation in June was 3%, with core inflation (excluding food and energy) at 3.3%. Most of the decline occurred in goods prices, not services. The strong dollar and moderating import prices curbed goods inflation. However, domestic manufacturers facing rising wages won't be able to sustain price cuts, leading to limited supply and increased prices. Implications for the Dollar: When the Fed eventually lowers interest rates, the dollar may weaken, raising import prices. This, coupled with domestic wage pressures, will contribute to persistent inflation. Stock Market Outlook: Despite concerns about the limited scope of recent stock market gains, the economic growth outlook is positive. FactSet estimates that S&P 500 profits will expand by 11.2% in 2024 and 15.3% in the first half of 2025. This should pave the way for a broader stock market rally. The U.S. economy is poised for growth, albeit with persistent inflation. This environment, coupled with the presidential election year, creates a favorable backdrop for the stock market. Investors should watch for opportunities in this evolving landscape. - The Team at Altos Trading In the next article: While the advice to "buy the market" is common, a closer look at individual stock performance reveals a more nuanced reality, highlighting the importance of careful analysis and selection for successful investing. Sponsor [PDF] Free Cheat Sheet: How to build a dividend portfolio Would you like a simple set of guidelines for building a rock solid dividend portfolio? Including the two specific tickers I just put $50k into? Well, it’s all included in these FIVE Dividend Cheat Sheets [>> You can grab your FREE, laminated copies right here <<]( Just Pay Shipping! P.S. On the next page you’ll see a step-by-step video demonstrating how to put these [Five Dividend Investing Cheatsheets]( work for you! By clicking the link above you agree to periodic updates from ProsperityPub and its partners ([privacy policy]( A Price Trend Perspective on "Buying the Market" The common advice to "buy the market" often overlooks the varying performance of individual stocks and sectors. While the S&P 500 is a widely followed benchmark, it's important to remember that it's composed of both winners and laggards. Analyzing Price Trends Since the Great Recession A helpful approach is to analyze individual stock performance based on a significant historical event, like the 2008-2009 Great Recession. Using a chart study that tracks standard deviations from the monthly mean price, we can identify stocks with smoother price trends and those with wider fluctuations. Focusing on the S&P 100 Leaders The S&P 100, comprising 101 of the largest and most established US companies, offers a refined selection of potential winners. However, not all stocks in the index have outperformed. Since the Great Recession, only about half have exceeded the S&P 100's average annual total return with dividends reinvested. Identifying Steady Outperformers Among the outperformers, some stocks stand out with consistent price gains and minimal deviation from their monthly means. Examples include UnitedHealth (UNH) and Lockheed Martin (LMT), which have delivered impressive returns with relatively stable price trends. Considering Price Trends and Other Factors While past performance isn't a guarantee of future results, analyzing historical price trends can provide valuable insights into a stock's behavior. It's essential to consider other factors like volume and recent price movements to fully understand a stock's trajectory. Conclusion "Buying the market" doesn't guarantee success, as performance varies widely among individual stocks. By analyzing price trends since the Great Recession and focusing on the proven winners within the S&P 100, investors can potentially identify stocks with the potential for consistent growth and less volatility. Remember, investing involves risks, and it's crucial to conduct thorough research and consider individual risk tolerance before making any investment decisions. Sponsor [New Customers earn 5.25% APY* (variable)]( Store your money with Cash Reserve, a high-yield account built for peace of mind. New customers earn 5.25% variable APY*—that’s 13x higher than the national savings rate. ** Plus, your money’s FDIC-insured up to $2M†at our program banks and no limits on withdrawals and transfers. **The national average savings account interest rate is reported by the FDIC (as of 5/15/23) as the average annual percentage yield (APY) for savings accounts with deposits under $100,000. [Sign Up Now!]( Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA [Unsubscribe]( | [Change Subscriber Options](