Overinflated Inflation Infatuation
Have you noticed that it’s been a hot minute since we’ve talked about inflation, Great Ones?
Anyone wanna take a guess as to why that is?
Why did inflation — May’s hottest topic, the scourge of the U.S. economy, the bane of Wall Street and the bringer of eternal damnation — suddenly fall off the face of the Earth?
So many questions! Tell us, oh genie with the light brown hair!
Um… I was going to tell you.
You didn’t have to make it weird.
The truth about inflation is that the Federal Reserve is right, the “Base Line” effect is real, and inflation was always a short-term issue. A “transitory” occurrence, as the Fed likes to say.
For instance, the Institute for Supply Management (ISM) released its service sector activity index yesterday — a widely watched inflation indicator. That report said that the price paid sub-index fell 1.1 points in June to 79.5.
For context, readings above 50 indicate expansion — rising prices — while readings below 50 indicate falling prices. Additionally, the 79.5 reading is the second highest such reading … but it is down from May’s reading of 80.6, which is the highest reading.
In short, the ISM services sector index shows that inflation pressures are falling … just like the Fed and yours truly said they would.
One indicator? That’s the basis for tooting your own horn? Come on. Now if there were two indicators…
Ask and you shall receive!
This week, IHS Markit released its final U.S. Services Purchasing Managers’ Index (PMI) for June. You know what that report said? You know I’m gonna tell you:
Not only did IHS Markit survey responders indicate a reduced concern over inflation, but the report itself also said that while costs are rising across the board, the rate of increase is slowing. Again, this is just what the Fed and I have been saying for months.
What’s more, economists are finally starting to realize this as well. According to Nancy Vanden Houten, lead U.S. economist at Oxford Economics:
So, Great Ones, if you dovetail this report with my rant yesterday on sanity’s return to Wall Street, you’ll begin to see the early stages of normalcy returning to the stock market. And why haven’t you heard about this return to normal yet?
Well … “normal” doesn’t exactly sell papers or generate pageviews, does it?
Hang in there, Great Ones: The end of this insanity is almost in sight.
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OK … maybe I spoke too soon about “sanity” returning. Have you seen Newegg (Nasdaq: NEGG) lately? The stock is up more than 500% since June 27 with absolutely no news.
Well, no news that would generate a 500% surge. Motley Fool says the rally is because of an Nvidia graphics card lottery. Business Wire talks about custom PCs on demand. But neither of those support a 500% NEGG stock rally.
Wait … we’ve seen this kind of activity before. Just let me check… Yup. There it is. WallStreetBets has been on this stock since the rally began. Welcome to meme stock status, Newegg. Enjoy the ride while it lasts.
Solar stocks like Sunnova (NYSE: NOVA) were scorched to oblivion over the past few months, but analysts over at Raymond James think the bottom is in — at least for NOVA. The firm upgraded Sunnova shares from outperform to strong buy, noting that the spring sell-off had tempered the stock’s overblown valuation down to more reasonable entry points.
Raymond James also has a price target of $50 on Sunnova shares, meaning he expects NOVA to eventually rally back up to February levels as more investors buy the dip on solar. But NOVA is far from the only hotness in the solar market right now…
This new technology is being hailed as a game-changer: It allows solar power plants to absorb much more energy during the day and pump it back out whenever it’s needed … even hours after the sun’s gone down.
In short, it makes solar power work “on demand.” And now, the world’s billionaires are scrambling to get in on it… (Click here to learn more.)
If watching Jack Ma’s Alibaba debacle taught us anything, it’s that things can always get uglier when it comes to China’s tech crackdowns.
This week, Didi (NYSE: DIDI) is learning that lesson firsthand after the ride-hailing app was removed from app stores as part of China’s crackdown on alleged cybersecurity concerns.
Today, however, shortcuts to the Didi app were also pulled from WeChat and Alipay — two super-apps with over 1 billion and 900 million users, respectively — which further reduces how many people can access the app. In effect, you can only use Didi’s services if you downloaded the app pre-ban.
It’s clear that China’s serious about taking this “cybersecurity” baseball bat to Didi’s kneecaps, and Didi is already warning about the revenue impact of basically nobody being able to even access its platform. I’d say that’s a rather glaring risk to revenue myself.
Today’s the day we call out to you to sound off on the latest hot-button topics (or, at least, whatever’s on our mind at this particular moment).Welcome to polling day, my Great Ones!
If you’re looking for even more of that chitter-chatter only Great Ones do best, you’ll want to stay tuned for tomorrow’s edition of Reader Feedback. Better yet, drop us a line right here right now to make sure your voice is heard before we dig into the Great Stuff mailbag tomorrow!
In last week’s poll, we asked you to get out your crystal balls and predict when sanity would finally return to the housing market. About 58.8% of you were totally 100% definitely sure that the housing market will crash six months from now, while another 26.5% think that the crash has already begun.
And for the 14.7% of you who think a housing correction will never come … lemme guess … you just overpaid on a house?
Since y’all get a kick out of predicting the booms and busts of random stuff, today’s poll is on *shuffles cards* … oil!
With the price of oil tap dancing against new highs, do you think black gold is heading even higher? In other words … will this oil rally continue?
Click below and let me know:
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Also, if you have more to say about oil than a mere poll can satisfy, by all means, talk my ear off! Write to us anytime the market muse calls to you: GreatStuffToday@BanyanHill.com. You might just see your hot takes in tomorrow’s edition of Reader Feedback!
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Until next time, stay Great!
Editor, Great Stuff