Don't Let Media Fearmongering Throw Off Your Game

The mainstream media continues to stoke inflation fears in Americans' minds... Bloomberg provided the latest example. Last Friday, it published this headline... [Chaikin PowerFeed]( Don't Let Media Fearmongering Throw Off Your Game By Marc Gerstein, director of research, Chaikin Analytics The mainstream media continues to stoke inflation fears in Americans' minds... Bloomberg provided the latest example. Last Friday, it published this headline... [Chaikin PowerFeed] PCE stands for "personal consumption expenditures." [Like the Consumer Price Index ("CPI")]( the PCE index measures inflation. But these metrics use different data sources and formulas... In short, CPI measures direct consumer costs. PCE includes those costs plus the relevant business expenses for consumers' benefit. The Federal Reserve looks at both indicators before making any moves. But it favors PCE. So it's noteworthy when media outlets like Bloomberg say that PCE "comes in hot." I won't debate the Fed's choice today. And investors don't need to take sides, either. Ultimately, we just want to know whether inflation is accelerating, decelerating, or stuck in place. In other words... we want the big picture. And unlike Bloomberg, I'll try to calm your fears instead of adding more fuel to the fire... Recommended Links: [Here's What We're Watching Today (Live @ 11 AM ET)]( It's only appeared in the market twice in the past 50 years. And you could have made a 424% gain on the LOWEST-risk investment available the last time we saw this. Which is why one 20-year market veteran calls it, "THE biggest, and perhaps most obvious setup I've seen in my entire career." [Click here by 11 a.m. Eastern time for details](. [BUY ALERT: United Natural Foods, Inc. (UNFI)]( This company is up 588% over the last 3 years and just flipped back into BUY mode. But before you consider buying a single share, you must understand the reason why this is happening now. [It's 100% free to get all the details on this page right here](. When analyzing CPI and PCE data, we need more than just a simple spreadsheet. After all, we're looking at a massive economy with gazillions of fluctuating variables. As a result, economic indicators like CPI and PCE rarely line up with a straightedge ruler. Rather, they're prone to zig and zag over time... For example, in December, PCE came in at 7.4% year over year ("YOY"). Then, in January, the YOY increase was 7.9%. Now, I admit... if you look at nothing else, it does seem like PCE now "comes in hot." But that's why we want the big picture. With added context, our perspective changes... In January 2022, PCE was 12%. It rose to a YOY change of more than 13% the next month. But by this past November, it had shrunk to 7.3%. Then, it "swelled" slightly to its latest two readings. Given that context, how "hot" was the latest 7.9% number really? Before you answer, let's add even more context... It's useful to compare today's economy with the inflationary era of the early 1980s. Take a look at PCE over that period... [Chaikin PowerFeed] Notice how the YOY change in PCE once again spiked higher from late 1982 through early 1984. And then, it remained stubbornly high through 1985. By using Bloomberg's current "comes in hot" logic, that trend should've fueled a hefty period of reinflation. But that didn't happen. Look at the CPI data from 1979 to 1985... [Chaikin PowerFeed] Sure, CPI ticked higher a couple times. But importantly, those moves didn't spell doom... In December 1986, CPI dropped to 1.2%. And despite creeping back up to 6.4% in October 1990, it mostly hovered around 2.5% for the next 30 years. Based on all this context, the latest 7.9% PCE reading isn't as "hot" as Bloomberg suggests. Look, I'm not saying elevated inflation isn't a problem... We've dealt with this issue for more than a year. And we continue to deal with it today. So I can't promise that the next CPI or PCE update will come in lower than the previous data. As we've seen today, these numbers can zig and zag. And I definitely won't tell you that interest rates have peaked. The Fed already made it clear that more rate hikes are coming. It's still trying to get inflation under control. But if we hope to work through this problem, we need to understand the big picture... That means looking beyond the media's fearmongering for the full context. Good investing, Marc Gerstein Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 +0.13% 8 14 8 S&P 500 -0.37% 139 259 101 Nasdaq -0.80% 32 50 18 Small Caps +0.15% 514 924 448 Bonds -1.08% Energy +2.02% 4 14 5 — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain somewhat Bullish. Major indexes are mixed. * * * * Sector Tracker Sector movement over the last 5 days Materials +2.37% Energy +2.24% Industrials +0.95% Financial -0.01% Information Technology -0.57% Discretionary -1.76% Communication -2.12% Health Care -2.22% Real Estate -2.23% Staples -2.44% Utilities -4.50% * * * * Industry Focus Insurance Services 26 22 1 Over the past 6 months, the Insurance subsector (KIE) has outperformed the S&P 500 by +13.76%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #2 of 21 subsectors and has moved down 1 slot over the past week. Top Stocks [rating] UNM Unum Group [rating] HIG The Hartford Financi [rating] RE Everest Re Group, Lt * * * * Top Movers Gainers [rating] FSLR +15.69% [rating] VLO +5.74% [rating] FCX +4.96% [rating] PSX +4.56% [rating] MPC +4.52% Losers [rating] LOW -5.56% [rating] ARE -4.59% [rating] AAP -4.24% [rating] WBD -3.84% [rating] GPC -3.70% * * * * Earnings Report Reporting Today Rating Before Open After Close BBY AVGO, COO HPE HRL COST No earnings reporting today. Earnings Surprises [rating] SPLK Splunk Inc. Q4 $0.83 Beat by $0.58 [rating] SNOW Snowflake Inc. Q4 $0.11 Beat by $0.06 [rating] CRM Salesforce, Inc. Q4 $1.68 Beat by $0.32 [rating] HZNP Horizon Therapeutics Public Limited Company Q4 $1.24 Beat by $0.15 [rating] VEEV Veeva Systems Inc. Q4 $1.13 Beat by $0.06 * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. For questions about your account or to speak with customer service, call [+1 (877) 697-6783 (U.S.)](tel:18776976783), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice. © 2023 Chaikin Analytics, LLC. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Chaikin Analytics, LLC. 201 King Of Prussia Rd., Suite 650, Radnor, PA 19087. [www.chaikinanalytics.com.]( Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors. Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.