Nick Hodge,
Publisher
March 10, 2021
The broader market — as evidenced by the S&P and NASDAQ — got past its volatility and sell offs of last week.
I told you that would be the case with the Volatility Index having remained below 30.
I don't think that we're entirely out of the woods and we have to consider that the broader market is at an inflection point, but nonetheless, it wasn't the big sell off that some people anticipated and said it was going to be.
And you had some real chances there to buy some dips, and now to lighten up as the indices come back up to near record highs.
Unless they break back out to record highs, I would have a bit of concern that again, we might be entering a transition in this ripping bull market in equities that we've seen.
But it's inflation, I want to talk about today because CPI was out this morning at 1.3%, and there's a lot of Wall Street suits out there, Old Guard, as it were, that are happy that inflation isn't manifesting and that we can print so much money and inflation can be so low.
And here's a Tweet that I'm just going to riff on for this update today. It’s from Bull and Baird on Twitter, and says, "We need t-shirts that say we printed trillions of dollars and CPI is 1.3%. Also bring it inflation truthers."
Okay, I'll bring it.
Oil is up over 100% in the past year after going negative in early 2020. So you have a global fungible commodity going from negative dollars per barrel to inflating over 100%, hitting $70 a barrel recently.
So oil is up over a hundred percent as they say there's no inflation.
It flies in the face of what the government number says.
And so to take the government's number at face value is not the smartest thing to do considering the government's track record of telling the truth and following up on their word and their promises.
Let's go to copper, inflating over 70% in the past 12 months. Base metals like copper, nickel, et cetera, don't inflate at that rate unless there's what? Inflation.
Copper at 10 year highs. People are stealing copper again because they're desperate. They're stealing catalytic converters because platinum group metals (PGMs) prices are inflating.
Palladium is at multi-year highs and peoples’ paychecks aren't inflating at the same pace as these commodities. I can guarantee you that.
The same government that lies about inflation won’t give you a $15 minimum wage.
And so let's talk about food for a little bit, which people actually have to eat.
Corn has inflated 50% in the past year. This is a grain that Native Americans figured out how to grow in mass hundreds and hundreds and hundreds of years ago. And it's inflating here in 2021, 50% over the past year.
The UAE is talking about capping food prices because food inflation is on a runaway pace. Global food prices — grain prices — now at six year highs.
Housing prices are inflating. The house I own here outside of Spokane has inflated in value 50% in the past three and a half years. There's houses in middle-class neighborhoods here listing at $750,000 and selling above asking price on the day of listing, or within the first week.
There's a shortage of houses as you look at it on a 30 day supply basis.
But no, there's no inflation.
And again, those people's paychecks — who need to buy those houses for their growing families — certainly aren't keeping pace with the inflating value of real estate.
Let's look at some other specialty metals like lithium carbonate up 68% in China in the past two months, or cobalt hydroxide up 65% year to date.
This is rampant inflation.
And those of us who have been harnessing that inflation in our accounts have been greatly outpacing the market. You've got an S&P that's up 5.5% for the year, but you've got sub sectors of the S&P that are far out-inflating it.
The Energy Select SPDR (NYSE: XLE), for example, is up 35% year to date — some six times as much as the S&P!
So to sit there and say, “there's no inflation,” and to be smug about it, is hubristic at best and dangerous at worst.
Because,
- You’re not going to be making the gains that you could be making if you owned inflating assets and...
- Inflation is also going to eat your lunch when it comes to the purchasing power of the dollar, because you're going to get left wondering why your kid's Lunchables costs so much.
You should want to own the right assets that are inflating beyond the Dow and the NASDAQ and the S&P.
So inflation is clearly here and we'll continue to harness it until it’s not.
Keep an eye on these major indices to get back to all time highs, and if they don't, there could be a bit more weakness ahead.
Of course, premium subscribers are getting buy and sell alerts that harness this inflation in real time. We sold a bit of energy this morning, locking in, again, those outpaced gains that are going up faster than the S&P.
So check out our publications if you haven't yet.
Call it like you see it,
Nick Hodge
Editor, Daily Profit Cycle
Nick Hodge is the co-owner and publisher of Daily Profit Cycle and Resource Stock Digest. He's also the founder of Hodge Family Office, the umbrella organization for his three premium services: Hodge Family Office, Family Office Advantage, and Foundational Profits. He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.
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