Liquidity vs. Oil
Today’s CPI number was even worse than the number crunchers expected.
So how does one react?
First, I don’t do anything quickly, have to look at all the numbers / relationships.
So here at 10:50 AM CDT is my take on the overall situation.
Oil is the Bad Guy, but it has been making a top for the past few days.
Liquidity is the good guy, virtually all of the 9.0 trillion dollars of Fed Balance sheet is still in place. There was a reason why the FED didn’t want to do much with it, it is the key factor in the economy. My take on the consumer is that the group most hit by inflation is the retiree’s. I know plenty of people in their prime working years who have never had it so good, their already high incomes are accelerating. That is one reason I see the economy taking off as soon as the Fed goes unofficially on hold, which will probably be after two more 0.50 Fed Fund increases, as all but the 3 month rate are around the important 3.0 % level now.
So, within the liquidity funded space that we are working I have concentrated positions (70 % of portfolio) in what I call the practical Tech EV area. The lows and buy days for this area occurred on May 11-12 and that was when I did most of my buying of RIVN, QS, SOXL, NVDA, TDOC, SMH, AARK. At this moment, this portfolio is up 14 % from the buy level. (SPX currently at 3903).
Going forward, we are watching the Bad Guy, Oil, and keep in mind, a gut wrenching flip from consumerism to practical reality that addresses climate change initiatives is the core concept to invest around.
You can drill down to our blogs of May 11 and May 12 to review our view on those two critical days.