WASHINGTON – After a healthy dose of red ink Monday, largely due to fears of a higher consumer price reading, Wall Street perked up Tuesday morning but then petered out for the rest of this Good Friday-shortened trading week. While consumer prices leaped upward by a horrible 8.5% adjusted rate – as opposed to the predicted 8.4% (which was bad enough) – the so-called core inflation rate, which excludes food and fuel (of course) jumped a predicted 6.5%. Economists closely watch this number and it made them happy since it wasn’t worse than predicted. But producer prices fared even worse than this. By the time markets opened Thursday, the three major averages depressingly capitulated once again. And once again, Mr Market transformed any remaining smiley face imojis back into frowning ones as the day relentlessly morphed into Red Ink Thursday.
The outcome again proved gloomy but predictably so under the brainless rule of our floundering Washington government junta. Clearly, our unelected combine of Ivy League socialist, globalist and climatista geniuses remains persistently clueless about how things work in a free-market economy.
Earlier in the week, CNBC offered a good Tuesday rundown on what led us to the Red Ink Thursday…
“Prices that consumers pay for everyday items surged in March to their highest levels since the early days of the Reagan administration, according to Labor Department data released Tuesday.
“The consumer price index, which measures a wide-ranging basket of goods and services, jumped 8.5% from a year ago on an unadjusted basis, above even the already elevated Dow Jones estimate for 8.4%.
“Excluding food and energy, so-called core CPI increased 6.5% on a 12-month basis, in line with the expectation.
“However, there were signs that core inflation appeared to be ebbing, as it rose just 0.3% for the month, less than the 0.5% estimate. That in turn sparked some hope that inflation overall was easing and that March might represent the peak [of increasing consumer prices.]
“Markets reacted positively to the report as stocks rose and government bond yields declined.
“‘The big news in the March report was that core price pressures finally appear to be moderating,’ wrote Andrew Hunter, senior U.S. economist at Capital Economics. Hunter said he thinks the March increase will ‘mark the peak’ for inflation as year-over-year comparisons drive the numbers lower and energy prices subside.”
… and by Thursday’s close, sellers continued to head for the exits
Things never really improved Wednesday, leading to the kind of Red In Thursday even morons could have predicted. But as of COB Thursday, CNBC at least offered us a credible box score.
“The S&P 500 and Nasdaq Composite fell Thursday, capping a losing week as investors digested mixed earnings results from major banks and rising inflation.
“The broad-market index fell 1.21% to 4,392.59, while the Nasdaq Composite lost 2.14% to 13,351.08. Meanwhile, the Dow Jones Industrial Average lost 113.36 points, or 0.33%, to 34,451.23.
“The S&P 500 is down 2.13% for the four-day holiday week. The Nasdaq Composite is off 2.63%, and the Dow is down 0.78% for the week. Trading is closed at the NYSE on Friday.
“The market’s moves came as inflation took center stage in investors’ minds this week. Treasury yields climbed higher, and two back-to-back U.S. inflation reports showed sharply rising prices. On Thursday, the benchmark 10-year U.S. Treasury yield rose back to multiyear highs, climbing 13 basis points to top 2.8%.
“‘What’s happening with yields directly impacts stocks at this stage of the game, because it’s just one more of so many other negative data points, or bearish data points, that investors have to deal with,’ said Adam Sarhan, founder and CEO at 50 Park Investments.”
With consumer prices soaring, it’s hard to find good recommendations these days
Given continuing bad news on consumer prices, the kind of news that’s contributing to our Red Ink Thursday swoon, we find it increasingly difficult to come up with good deals in this sloppy, fearful market. Today’s somewhat contradictory economic readings are part of this. Russia-Ukraine is definitely part of it as well, as is the Biden Junta’s plan to somehow increase the percentage of ethanol in summer gasoline supplies. Allegedly, this would up the percentage of ethanol per gallon from 10-15%. Again allegedly, it would stretch out the ethanol thing to all 4 seasons as well.
The problem with this typical “progressive” non-solution is two-fold. First of all, most cars will accept a maximum of 10% ethanol in their fuel blends. Prolonged use of 15% can eventually destroy the majority of gas-powered engines on the road today. Although maybe that’s a feature. One that would force more Americans to buy costly electric cars they can’t afford. But no one in Washington really cares about consumer prices.
Worse, however, by upping this ethanol requirement, the Feds could take more corn off the food market. By shifting it to ethanol production, they force producers to raise feed and food prices – again – by causing shortages – again. Add this to the cumulative effect of Russia’s alleged destruction of crucial grain storage facilities in Ukraine, and what do we have? Just another swell idea from our far left faux administration. Like anything or anyone “progressive” these days, they possess no comprehension of how our economy and economic sectors actually work.
Conclusion: From consumer prices to the economy, no one in Washington seems to know anything. Or care.
These “elected” or unelected D.C.-based clowns haven’t a clue as to how damaging this economic lunacy is for the average American household. Or, perhaps they do and just don’t care.
At any rate, the incredible ignorance shown by the election fortification crew currently running the nation’s government continues to wreck the country. Ditto personal investments and, well, everything else that you can think of.
But I digress.
Since no one in the Federal government seems to know anything anymore, good investment ideas remain hard to come by. Nearly every green idea seems to turn red the moment you plunk your money down. Or the moment the Feds notice it.
An ETF antidote to Red Ink Thursday?
Regarding that dearth of investment ideas, perhaps all isn’t lost. One set of ETFs has recently caught my eye. I refer to a the trio of Global X ETFs trading on the NASDAQ under the symbols QYLD, RYLD and XYLD. In order, these ETFs represent stocks trading on the NASDAQ 100 index of mostly tech stocks, the Russell 2000 index of small cap stocks and the broad-based S&P 500 index of large company stocks. These interesting ETFs either acquire or emulate the stocks in the indexes they represent. Then they write options against them for cash flow and (sometimes) gain.
All three oddball hybrid ETFs tend to lose some intrinsic value over time. But the dividends they pay out, primarily due to the hefty option premiums they constantly obtain, can prove breathtaking over time. Depending on the ETF, these range from 9%-11+% on an annualized basis. Better yet, they pay out dividends monthly.
I’ll discuss these ETFs at length in an upcoming article. But potentially, holding at least modest positions in one or more could keep cash flowing into portfolios while everything else tanks. Which just might happen over the next 6 months or so. At least
A second, more conservative idea?
I’ve also begun to invest monthly in something I’ve never considered before. Namely, US Treasury I-Series Savings Bonds. These inflation-proofed investment are revalued to prevailing commercial interest rates (plus a base rate) two times per year. The next rate change occurs May 1.
Current effective rate on these savings bonds is 7.12%. Current estimates of the upcoming May revision peg the next 6 month rate at a whopping 9.62%, more or less. I.e., if consumer prices soar, these savings bonds returns tend to soar with them. Note: There are additional “rules” that make the rate structure of I-Series Savings Bonds a bit more complex. But we plan to discuss these in another upcoming article. So stay tuned.
Meanwhile, looking at these I-Series rates, one wonders why he or she continues to invest in any stocks at all, given Mr Market’s 2022 face plant thus far.
That’s all for now. This week’s edition of Red Ink Thursday has passed, and we have a long Easter weekend to look forward to. And we should enjoy it.
Meanwhile, just keep looking at those ethanol percentages posted on your friendly local gasoline pumps if you want to save your engines. And remember: Joe Did That.
See you next Monday.
Follow CommDigiNews at
Truth (ap) @CommDigiNews
