Ryan Stancil,
Editor
July 4, 2022
Believe it or not, we’re already halfway through the year.
And as summer vacation season begins, all eyes are on the market at a time when the mantra is usually “sell in May and go away.”
Market watchers are anxious, mainly because the stock market has posted its worst first six months of the year in 50 years.
No sector has been safe from a sell-off. Even big names like Apple (NASDAQ: AAPL) and Disney (NYSE: DIS) have been feeling the pain as investor confidence continues to spiral. With a recession pretty much here, increasing inflation, and rising interest rates, people are simply running out of money.
And it doesn’t stop there.
Even bonds, which are seen as a more stable investment, haven’t been able to escape the market turbulence. The fact that even they have been experiencing a decline in value is another argument that things are worse than many people know.
And while those anxious market watchers are hoping for calmer waters heading into the second half of the year, reality likely has other plans.
Inflation continues running rampant with no end in sight. Food and energy prices, two of the biggest areas of spending for just about anyone, are outpacing wages. They’re also being made worse by the ongoing conflict in Ukraine. Supply chains are still messed up, further eroding consumer confidence.
Another signal that things are in a tailspin? Initial public offerings have been at the slowest pace since 2009, right after the financial crisis.
Through all of this, the Federal Reserve is determined to continue raising interest rates. At least for now. Chairman Powell acknowledged that the central bank's efforts to try and bring inflation under control were likely going to involve some pain.
So that means no one will be borrowing and companies won’t be able to grow via expansion and hiring of new staff.
Companies will soon release their second-quarter earnings. As more of those news releases come out, we’ll get a clearer picture of just what kind of shape the economy is actually in. But it’s important to remember that no matter how things turn out for corporate earnings, consumer sentiment is the textbook definition of pessimistic right now.
With consumer spending being the backbone of the US economy, that’s an important and often abstract metric that has a stronger influence than many think.
And it’s with that in mind that you want to make your plan for the next few quarters.
The inflation we’re seeing is affecting every sector across the board. While that means you’re paying more for anything you need, it also means the potential for you to benefit from the right investment plays is bigger too.
And even as inflation continues to climb, government spending on infrastructure will continue to move forward with a heavy focus on projects that require huge amounts of commodities that are in short supply.
Things like lithium, rare earths, and uranium are needed now more than ever. And they’re harder to get a hold of now more than ever.
So the companies that deal in these elements are going to do very well very soon, beating inflation to become some of the best investments in the market. The shortage has been years in the making, and it’s something that’s going to take years to resolve.
That means you have time to make the kinds of gains that make inflation much less of a worry than it is for countless others.
It’s a cycle that we’ve seen before, and it’s always made investors rich. This time won’t be any different.
These are the trades you need to make to take full advantage.
Ryan Stancil
Editor, Daily Profit Cycle