The CPI (Consumer Price Index) numbers are coming out Wednesday. We all can look at our bank accounts and make a pretty good guess about what the CPI is going to say.
Author Venita VanCaspel had this to say about inflation,
This idea gives me a sense of confidence in uncertain markets because I know that you and I are not among the ignorant.
Regardless of the intention behind the quote it has a specific meaning for my community.
That’s why I want to clue you in on what last month’s CPI numbers told us, what’s coming on Wednesday, and how we can outperform the markets.
We are going to be the well informed this time around and if you think you won’t be…
What is last month’s numbers is telling us about the economy?
Looking back at last month’s report, it’s actually insane what we saw.
The energy index rose 34.6 percent over the last year, the largest 12-month increase since the period ending September 2005.
We have all seen what this is doing to our monthly budgets, people cut cost where they can, stop going out as much, and stop traveling all together if times get bad enough.
There is a self-fulfilling prophecy that has us flying closer and closer to a recession.
Decreased spending on energy and oil = companies earnings missing their marks = increased prices = less spending.
This is leading us to a weaker economy and has a lot of people new to the markets running for the hills.
Not us. I am here to guide you through the uncertain times. This is why you joined me and my Night Traders, We are taking advantage of the direction the economy is going, looking past the headlines and playing the markets slow while taking profits along the way.
I am here to give you the read-between-the-lines plays and if you want the full scoop take a look at my recent offer to get on the inside track to making a profit on the energy sector this summer.
What we can expect on Wednesday?
Looking at what has been going on around the world we can get a pretty good idea of how this is going to play out.
Take a walk down main street with me and what do you see? Gas prices are still high, people opting to walk or take a bike when they can to cut down on the cost. Now we have more than just eyes right? What do you hear? Nothing but birds in a world that’s nothing but hustle and bustle. People are opening their windows rather than using the AC during a year that has been quite warm (for me at least).
People are doing everything they can to bring down their cost of living and prices are not changing much.
The reason a lot of you may have not noticed this yet is because it has become the norm. People since the beginning of the pandemic have been doing things to bring down cost out of fear. The only variable that has changed since then is the fear. We are no longer doing this out of fear, rather, Necessity…
I came across a chart from the U.S. Bureau of Labor Statistics that got the cogs turning in my brain.
This Chart shows the 12-month % change to energy (black), all items less food and energy (yellow), and Food (blue, because who dosent love a good meal am I right?)
If you notice the cost-of-living has gone up consistently since April of 2020 and as mentioned we all have been trying to bring the cost-of-living down at the same time. Energy has far outpaces other categories as you can see and this will bring us to a danger zone in the markets that if not played carefully, you will get crushed.
I don’t want to see my Followers lose money thanks to inflation and Consumer spending being forced to go up (this trend is NOT our friend) just to meet the minimum requirements for life AND by not playing the markets properly, losing money from both ends.
How we can be ready to outperform the markets?
When there is an upward change in the CPI, this means there has been an increase in the average change in prices over time. This eventually leads to adjustments in the cost of living.
You don’t need me to tell you that because you (just like the rest of us) are watching the value of our money decrease day over day in the way of increase daily cost for just the basics.
Hell, I went to the supermarket the other day and eggs were $4 a dozen when, 2 years ago they were only $1.30 or so.
What am I getting at here? We are already passed the first few rounds of the prophecy I mentioned earlier and in the middle of yet another round pulling us closer to the singularity of a recession black hole.
Everybody wants to point fingers and say “the consumer needs to spend more” or “corporations need to charge less.” Nobody is willing to budge and do these things not because they don’t want to but because they can’t.
If you want to keep you head above water in today’s markets you need to head to battle with a plan in mind.
How can you formulate a plan is probably the question you are ask
ing right now.
Technical data analysis, seasonality, and historical data.
For years I have been teaching my followers how to quantify the data and find a trade. A lot of you reading this right now have seen success using this tactic so I will continue to do my teachings.
There is a small issue with me doing this though, it takes time to learn a new skill, we all have busy lives and it may not be feasible for you to watch through HOURS of footage and reports to learn how to outperform the market.
That is why I put together my energy action plan! This is a side portfolio that I am working with my Night Traders on to guide them through uncertain times and get their money back from big energy and oil. I assume you don’t want to miss out on trades like ALK July puts for 376% in just a week or AUY June puts for 105% in 8 days. Now these are not energy trades but they are using the exact strategy I will be using to find energy trades for your portfolio.
Quantitative Specialist, Penny Hawk
July 11 2022