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Inflation Still Reigns Despite Decent Jobs Claims

by | Nov 24, 2021

Wednesday was a day where you had to read well below the fold to figure out what’s going on. And we did just that… The media was focused on the wrong thing — of course — while we looked at which assets to own during periods of inflation.

Most financial media outlets were focused on the weekly jobless claims number, which came in historically low…

Source: CNBC

Yes, 1969 is a long time ago. And that’s the last time weekly jobless claims came in this low… But if you look at the data, you see a pattern emerging. 

First, jobless claims typically dip around the holidays. Eliminating the past two years can show that trend… only in 2019 were they rising at an appreciable clip, and that foreshadowed a recession.

Source: Bloomberg

But more importantly, the rate of hires has been steadily picking up since the beginning of the year.

Source: Bloomberg

In general, a positive story… but there’s a catch.

Which Assets to Own During Inflation

Mortgage purchase applications were up 4.7% week on week, and accelerating.

Source: Bloomberg

Secondly, Personal Consumption Expenditure accelerated significantly in October, up to the highest point in 30 years.

Source: Bloomberg

With durable goods also ticking up — despite being held back by a decline in private aircraft prices — it’s clear that the economy remains in the throes of inflation.

Whenever inflation is rising, backtesting over the past 40 years shows that the following assets to own during periods of inflation are:

Source: Fortune Research

We went long the iShares Russell 2000 ETF (NYSEArca: IWM) Tuesday for this exact reason.

Those other assets are all just fine as well… Believe me, I have been desperate to put Bitcoin (BTC) or the Grayscale Ethereum Trust (OTC: ETHE) back into this watchlist. 

But the Russell 2000 was simply down the most… and I want to keep things simple.

As to the “why…” Although I’ve said it a million times, I’ll say it once more here… 

When inflation is rising, it’s your duty as an investor to own the things that are inflating.

And while it’s true that inflation won’t rise forever, it’s most certainly rising now.

So keep it simple… own small caps, retail, energy, crypto, tech and banks for the next few months.

If I had to pick one on our watchlist, Petco Health and Wellness Co. Inc. (NYSE: WOOF) is at an attractive price right now.

Source: Bloomberg

But honestly, most everything else except for energy is at the wrong end of recent trends. 

As such, we may re-jigger the watchlist significantly next week.

In the meantime, though, I’ve got the Thanksgiving holiday on my mind and am ready to wind down for a few days… It has been a long month.

To that point, though, I just wanted to say I appreciate all of you for reading.

I’m truly grateful that I get to muse on these ideas for a living, and I’m thrilled that you all are along for the ride with me.

So Happy Thanksgiving, everyone…. I’m so very thankful for each one of you.

All the best,

Matt Warder

Fortune Research

P.S. It’s easy to get lost in today’s market noise. But WealthPress Senior Strategist Roger Scott has a strategy that allows traders to spot stock picks when specific elements are met. 

That means we no longer need to spend hours upon hours staring at charts and researching companies. 

All we have to do is wait for a stock to cross this simple line… place a quick trade… and wait for it to move.

He calls this the “Sniper Line…”

We were able to make 83.87% on ALB just this past week, and 53.66% on PWR in November!

Want to learn how investors can identify stocks crossing his Sniper Line?

WRITTEN BY<br>Matt Warder

Matt Warder

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