Debunking the Latest Inflation Worries

Here’s what the data says… [TradeSmith Daily]( Debunking the Latest Inflation Worries By now you’ve seen the headlines: Inflation ticked higher. The latest CPI reading for August ramped to 3.7%, coming in well-north of July’s 3.2% level. This hotter-than-expected print sent the bears growling, suggesting this level of a inflation will be a problem for stocks. But is it really a problem? Today we’re going to answer this question by looking at data. First let’s take a stroll down history lane. Let’s review all inflation readings since 1960 in the chart below. As you’ll notice in light blue, inflation was anchored for most of the ‘90s through 2020, hovering in the 2%-4% range. More recently, inflation has fallen mightily in 2023 after surging last year. The arrow points to the latest upmove in CPI. Also included in the chart is the Fed funds rate, which has recently inverted vs. CPI: BLS.GOV, Tradesmith RECOMMENDED LINK [R.I.P. for the American Dream? (Surprising answer inside...)]( A record-low happiness level is seeping through the nation’s fabric like wildfire. The culprits? The floundering state of the economy... rising housing costs... and skyrocketing inflation. It’s called the “opportunity gap”... And the bad news is it’s only getting wider. BUT THERE IS HOPE... Meet Andy and Landon Swan, a couple of Midwestern brothers who transformed themselves into legendary Wall Street fintech experts. Fortune 500 companies and $100 billion hedge funds pay up to $750,000 a year to access their stock market research. Now they’ve issued a major buy alert for a surprising company making news in the AI space. They have compelling evidence that this [Great $2 AI Moonshot]( could become the #1 tech sensation of the decade! [Go here now for the details]( While inflation did indeed tick higher, it’s important to understand why. After you breakdown the components that make up the CPI calculation, gasoline was the single largest contributor to the increase. If you’ve filled your car up lately, you know what I mean. You’ve felt the pinch. Below outlines all inflation items from last month. In red, I’ve boxed what’s important: gasoline prices rose over 10% in August. BLS.GOV, Tradesmith That’s a big gain indeed! This should come as no surprise given that Crude oil has been on a tear since July. Crude oil futures hover at the highest levels of 2023: YahooFinance Ok, so now that we know why inflation is gaining, let’s now focus on what it means for stocks going forward. Are equities doomed as the pundits say? The decisive answer is a resounding NO. Don’t take my word for it. Let’s prove it! The Data Tells the Tale For this historical study, we’re looking at all CPI levels back to 1955. Today’s CPI print of 3.7% doesn’t suggest stocks will fall off a cliff as many fear. In fact, inflation readings between 2%-4% show a forward gain of 11% for the S&P 500 over the next 12 months. This means that even if inflation ticks up to 4% in the coming months, which is possible, expected gains are the same! RECOMMENDED LINK [His System Isolated Nvidia – Here's His NEXT Buy]( Marc Chaikin's stock-picking system isolated Nvidia before its massive bull run this year. Now, it just flashed "BUY" on a new AI company that no one is talking about yet. It's not a household name... but Marc predicts it could quickly double or triple from here. [Click here for the name and ticker]( Only when inflation rises above 6% do we see average negative returns for stocks. The surging inflation reading of 9.1% in 2022 is case in point! Check it out: This analysis debunks the latest inflation worries and shows why data offers a better perspective than headlines ever will. I say, buy into the fear. History is on your side. At TradeSmith, we take an evidence-based approach to investing. If you’re looking for explosive stock picks with an analytical methodology, check out [Quantum Edge Pro](. Jason recently released one of his favorite AI picks with a huge potential runway that his paid-up members can access [here]( (friendly reminder that paid-up members must be logged in to access). [For everyone else, click here to subscribe.]( Have a great day, Lucas Downey Contributing Editor, TradeSmith Get Instant Access Click to read these free reports and automatically sign up for research throughout the week. [25 Doomed Blue Chip Stocks]( [3 Stocks That Could Triple This Year]( [Download now on the Apple Store]( [Get It On Google Play]( [Customer Support: 866.385.2076](tel:+866-385-2076) | support@tradesmith.com [Request Customer Service](mailto:support@tradesmith.com) ©TradeSmith, LLC. All Rights Reserved. You may not reproduce, modify, copy, sell, publish, distribute, display or otherwise use any portion of the content without the prior written consent of TradeSmith. 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