🛁 Are we still in a bubble, Ray Dalio?

Yup, US prices are still high | Toyota needs more fuel | [TOGETHER WITH]( Hi {NAME}, here's what you need to know for May 12th in 3:01 minutes. 🧠You might think you have control over your investing impulses, but your biases are constantly shaping your decisions. Join Sage Mountain’s Scott Nue for [How To Go From Ideas To Execution]( on Thursday, and find out how to actually master your investing process. [Grab your free ticket]( Today's big stories - US consumer price rises barely slowed down last month - Our analyst has looked into whether you should buy the dip based on Ray Dalio’s “bubble indicator” – [Read Now]( - Toyota gave a grim outlook for this year Emo Trip [Emo Trip] What’s Going On Here? Data out on Wednesday [showed]( that US consumer prices rose more than expected last month, even though the Federal Reserve thought this “doom and gloom” thing was just a phase. What Does This Mean? Not to bring you down or anything, but woe is us: airfares surged 33% last month from the same time last year, food by 9%, and shelter by 5%. That all contributed to a higher-than-expected increase in overall consumer prices of 8.3%. And sure, this marks a slowdown from March’s 8.5%, which has some economists arguing that we’re probably past peak inflation. But equally, it highlights that any dropoff in prices is bound to happen painfully slowly. And we’re going to feel every bit of it, with inflation-adjusted wages falling 2.6% last month from the same time in 2021. Existence is meaningless. Why Should I Care? For markets: Are US stocks falling out of favor? Investors have already had to [deal with]( one of the worst starts to the year for stocks since 1939, but this bleak data suggests things could get much worse. It might force the Federal Reserve to raise interest rates quicker than expected to make more of a dent in inflation – even if it comes at the expense of economic growth. That might be why some traders are now betting on a fourth-straight hike of 0.5% in September, and why some analysts reckon the US stock market – down 17% so far this year – could fall as much as 20% further. Zooming out: Are Chinese stocks back in favor? America stands in stark contrast to China, where consumer prices only [rose]( 2.1% last month compared to the same time in 2021. That could leave room for its central bank to, say, slash interest rates, which should encourage spending and boost economic growth. And with Covid cases showing signs of tailing off, investors seem to see value in the country once again: its stock market rallied on Wednesday. You might also like: [How to survive the post-rate hike apocalypse.]( Copy to share story: [( 🙋 [Ask a question](mailto:questions@finimize.com?body=Ask us a question: Where are you writing from? Let us know and we'll mention it when we reply.&noapp=true&subject=Emo Trip&utm_campaign=daily-global-12-05-2022&utm_source=email) Analyst Take Is Ray Dalio’s “Bubble Indicator” Telling You To Buy The Dip? [Is Ray Dalio’s “Bubble Indicator” Telling You To Buy The Dip?]( [Photo of Reda Farran] Reda Farran, Analyst What’s Going On Here? Ray Dalio – the billionaire founder of the world’s biggest hedge fund – is known for many things. But his [“bubble indicator”]( might be his masterpiece: it’s based on [six questions]( that help establish whether we’re in an environment of unsustainably high prices. It was [sounding the alarm]( about US stocks early last year, but here’s the good news: it’s now suggesting we’re not in a bubble anymore. As for whether that means we should all scramble to [buy the dip](, that’s a different matter entirely. So that’s today’s Insight: why the bubble indicator says we’re not in a bubble, and [whether you should buy the dip because of it](. [Read or listen to the Insight here]( SPONSORED BY THE MOTLEY FOOL Ordinary people, extraordinary stock? You often hear about Warren Buffett’s latest windfall, or Bill Ackman’s. But you don’t often hear about [Frank from Nevada](, a man who just bought his dream home in Tahoe. Or [Pete from Kansas](, who brought his struggling business back from the brink. These guys aren’t headline-grabbers, but they did invest in [a single stock]( that The Motley Fool thinks is well worth a look. Now, obviously, any stock brings plenty of risk. But [The Motley Fool]( has spotted a strong balance sheet, free cash flow, and what is arguably a [remarkably low valuation](. The Motley Fool has all the details: [find out more about the stock here](. [Find Out More]( Ah Nuts [Ah Nuts] What’s Going On Here? Toyota [announced]( on Wednesday that it had sold a near-record number of cars in its past year, but the carmaker will need those acorns of success to get through the bitter winter ahead. What Does This Mean? Toyota’s sales have gone through the automatic roof, with the company selling a near-record 9.5 million cars in the past financial year. It posted the highest-ever operating profit for a Japanese company too, thanks to a rival-beating formula of cost-cutting measures. But the past is the past: the carmaker now reckons raw material prices will double this year from last, when they were already at an all-time high. That, the carmaker said, will drag its profit down by 20%, even as it expects to sell 13% more cars and continue to [benefit]( from a weaker yen. And while Toyota is known for giving conservative forecasts, this one was outright Republican: investors sent its stock down 6%. Why Should I Care? The bigger picture: Everyone’s agreed, then. Toyota’s acute pessimism is mirrored by industry analysts, who have been warning about the risks to carmakers in the next 12 months. Market research firm IHS Markit has downgraded its forecast for global vehicle production twice in as many months, based on things like the war in Europe, the fallout from Chinese lockdowns, and the languishing microchip recovery. Jefferies’ analysts, meanwhile, argue that still-high inflation and an impending slowdown in global economic growth might put would-be car buyers off altogether. Zooming out: Shut up and don’t drive. There are already signs that China’s drivers are stepping away: data out this week showed that car sales in the world’s biggest market fell 36% last month from the same time in 2021 ([tweet this](). That’ll happen when you lock down carmaking hubs like Shanghai, bringing production to a halt and keeping buyers out of showrooms… You might also like: [Where auto experts see the auto industry’s biggest opportunities.]( Copy to share story: [( 🙋 [Ask a question](mailto:questions@finimize.com?body=Ask us a question: Where are you writing from? Let us know and we'll mention it when we reply.&noapp=true&subject=Ah Nuts&utm_campaign=daily-global-12-05-2022&utm_source=email) 💬 Quote of the day “If you can imagine it, you can achieve it. If you can dream it, you can become it.” – William Arthur Ward (an American motivational writer) [Tweet this]( SPONSORED BY THE MOTLEY FOOL A break from the everyday [The Motley Fool]( specializes in [stock picks](. That’s what it does – week in, week out. What it doesn’t do very often is issue a [“triple-down recommendation”](. In fact, there have only been 28 in its 19-year history. So you might get a couple a year, if you’re lucky. But The Motley Fool is so enthusiastic about [this one stock](, with a robust balance sheet and a strong cash flow, that it’s gone ahead and issued its 29th [triple-down recommendation](. [Find out all about the stock here](, and decide for yourself. [Find Out More]( When you support our sponsors, you support us. 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