Inflation Numbers Come In Lower Than Expected And Gold Looks To Be Solid Opportunity For Investors In Volatile Market

TL;DR

• A key measure of inflation watched closely by the Fed, Personal Consumption Expenditure (PCE) came in slightly lower than expected, up 0.3% in February
• This was lower than the 0.4% projected and the 0.5% from last month
• Sentiment continues to drive markets, as investors trade more on short term emotions rather than long term fundamentals
• Gold is looking like an opportunity in the current environment, and we’ve launched the brand new Gold Rush Kit to take advantage
• Top weekly and monthly trades

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Major events that could affect your portfolio

Today we saw the latest Personal Consumption Expenditure (PCE) index figures released, and they’ve come in slightly below expectations. Unsure what PCE is? Well, it’s a measure of inflation, which is a confusing term because there are so many different ways to measure it.

Generally, the most widely used figure that people refer to when they say inflation is the Consumer Price Index (CPI), but PCE is widely used by those in the know. Crucially, the Fed keeps a very close eye on it when they’re deciding what to do with interest rates.

The data for February has just
just
been announced and Core PCE (PCE excluding volatile food and energy prices) was up 0.3%, which is below the 0.4% which had been expected and below the January figure of 0.5%.

It brings the annual rate to 4.6% as opposed to 4.7% last month. So overall, it’s a positive result for the Fed, as they’re desperate to bring down inflation.

For investors, it adds a little more hope to the prospect of a pause in rate hikes at the next FOMC meeting. Fed chairman Jerome Powell stated at the most recent announcement that they may look to do so if the trouble in the banking sector slows down economic activity organically.

This could mean that the inflation rate continues to come down without further intervention needed from the Fed. Right now though, the PCE data alone isn’t enough to make the call either way. It continues to be one to watch.

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For investors, fundamentals are important for the long term success of a portfolio. In order for a company to provide returns, they need to have a solid business. Companies need to generate revenue and profits, bonds need to pay consistent interest, precious metals need to maintain their status as a store of value and scarcity and crypto…well, crypto tends to play by a different set of rules.

Either way, fundamentals matter.

But they’re not the only thing that matters. Especially when it comes to short term results, emotion and sentiment tend to rule the day. We often see individual stocks or market sectors go through massive periods of growth based on nothing by hype alone.

Fear and greed are powerful motivating forces for humans, and they can have huge impacts on the way investments move.

2022 was a perfect example of that. Tech stocks saw massive reductions in the value of their stocks, even though many of their fundamental business models remained unchanged. Amazon
AMZN
stock is down over 36% over the last 12 months. Are you buying less from Amazon? Probably not.

Particularly in the banking sector, we’ve seen sentiment causing major swings in asset prices. An insignificant bond sale from Deutsche Bank last week caused the price to tank, not because of a major change in fundamentals, but because sentiment over the banking sector is making everyone nervous.

While it’s possible to profit off this, it’s difficult. The more important message for investors is to not let short term sentiment allow you to panic from sticking to your long term investment plan.

This week’s top theme from Q.ai

Gold has been a safe haven asset for thousands of years, and it still is today. Governments all over the world have trillions of dollars worth of gold reserves, and while currencies like the U.S. dollar aren’t fully backed by gold anymore, it’s still an important measure of the financial security of a country.

But it’s not just governments, with many individual investors also holding on to gold as a long term store of value, as well as companies using it in tech applications as diverse as microchips and solar panels.

The gold price tends to increase during times of economic uncertainty. When trust in the system and the markets falls, investors flock to an asset they can hold in their hands, lock in their safe or hide under their bed.

Not only that, but we’re seeing a continued uptick in demand from the sustainable technology sector, plus the potential for a weakening U.S. dollar also goes in gold’s favor. So all in all, there are a lot of factors making gold look like an attractive place to be.

For investors who want to invest in gold without having to buy a safe and an alarm system, we’ve just launched the new Gold Rush Kit. It’s an easy way to gain exposure to the gold price, by investing directly into gold mining companies.

Every week our AI analyzes and predicts which of these are likely to perform the best, and then automatically rebalances the Kit in line with these projections.

Top trade ideas

Here are some of the best ideas our AI systems are recommending for the next week and month.

AngioDynamics (ANGO) – The medical device company is one of our Top Buys for next week with an A rating in our Growth and Technicals factors. Revenue was up 9.3% in the 12 months to February.

First Solar (FSLR) – The solar company is our Top Short for next week with our AI rating them an F in Quality Value, Low Momentum Volatility and Technicals. Earnings per share was down 109.46% in 2022.

Anywhere Real Estate (HOUS) – The real estate company is our Top Buy for next month with an A rating in Technicals. Gross profit margin was 36.1% in 2022.

Rivian Automotive (RIVN) – The electric vehicle maker
maker
is our Top Short for next month with our AI rating them an F in Quality Value and Technicals. Earnings per share were -$7.40 in 2022.

Our AI’s Top ETF trades for the next month are to invest in gold miners and microchip stocks, and to short long term US Treasuries, mid-cap US stocks and the materials sector. Top Buys are the VanEck Gold Miners ETF, VanEck Semiconductor ETF and the ProShares UltraShort 20+ Year Treasury and Top Shorts are the iShares Core S&P Mid-Cap ETF and the Vanguard Materials ETF.

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