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It’s time to face the music.
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Inflation is at its highest level in 40 years, with the yield of the 10-year Treasury rising to 2.3% for first time since May 2019. The yields for the three, five, and 30-year Treasuries is 2.38%, 2.59%, 2.71%, and 2.6% respectively.
This means that the yield curve is flat, which means that yields are almost identical across the board. This could signal an economic slowdown. Atlanta Fed predicts that 1.3% GDP growth will occur in the first quarter.
The Federal Reserve now wants to lower this horrible inflation by increasing rates. As I have previously reported Last weekThe Fed approved a quarter-percentage rate increase and stated that it expects each of the six FOMC meetings to offer an opportunity to increase rates.
This panic selling led to panic, but the market rebounded after Fed Chair Jerome Powell assured investors the central bank would gradually raise key interest rate.
Jerome Powell, Fed Chairman and Chief Economist, was more hawkish on Monday. He said that the Fed would raise rates even higher if necessary to lower inflation. This could mean that Fed Chairman Jerome Powell will raise rates by half the expected amount at its next meeting. Instead of a quarter point, it could go further.
The problem is that if Fed increases rates too much and the yield curve becomes inverted when long-term and short-term returns are equal, it will harm the economy and affect the banks the Fed regulates. The yield curve was briefly inverted twice this weeks, with the two-year Treasury yield moving higher than the five year Treasury and Wednesday morning when the five year Treasury rose above the 10-year Treasury.
I’ve heard financial stock talkers on the financial news. If you have, I encourage you not to listen. This is a huge mistake. In a flat yield curve environment such as ours, banks are not a good investment. Personally, I don’t like banks. I used to work in a Federal Reserve division. I was horrified to see how they basically cooked their books during my time there. An inverted yield curve has the disadvantage of also describing what happens before you enter recession.
The fact is that both the U.S. central banks and European central banks are facing a reckoning about their policy of unlimited currency printing, also known as Modern Monetary Theory. The question is: Can they dial that back?
I will tell you that I don’t believe so.
This is why I believe that the Fed will move slowly.
I think we will also have stagflation. This is where the economy remains stagnant and inflation will continue to rise.
This high inflationary environment is reminiscent of the late 70s/80s. It was a thrilling time for the stock exchange, as Stocks that are fundamentally superior Real estate is a great inflationary hedge.
The Fed wants to raise rates but existing home sales fell 7.2% and 2.4% in February, respectively. In fact, February saw an increase in the supply of unsold homes. Potential buyers are facing rising home prices and increasing interest rates.
You might be wondering what to do as an investor amid all the Fed confusion and infighting.
Simply load up Stocks that are fundamentally superior can be used as inflation hedgesThat are thriving in the current market environment
How to Choose Superior Inflation Hedge Stocks
This is an example: Marathon Oil(NYSE:MRO).
The company was originally founded in 1887 as an oil production company (Ohio Oil Company). The business was an integrated oil firm for the first 90 of its existence. Marathon Oil began operating as an independent exploration company and production company in 2011 after the refining business was sold.
The company is primarily based in the U.S. and has facilities and wells in four of the most prolific oil-producing basins in America: Eagle Ford and Bakken, STACK/SCOOP and Permian Basin.
Marathon Oil had also proved 1,106 million barrels equivalent of oil equivalent per day at the end in 2021, which is a 14% increase over the previous year.
It’s not surprising that Marathon Oil exceeded analysts’ expectations for its top and bottom-line growth during the most recent quarter. Fourth quarter revenue rose 24.1% over the previous year to $1.8billion, surpassing estimates of $1.54billion. Fourth quarter earnings rose 97.4% year over year to $592million, or $0.77 per sen, beating estimates of $1.54 billion by 40%.
The analyst community has raised its forecasts for the quarter after the better-than expected results. Earnings are expected to increase 200% year-over–year to $0.63 per Share, up from $0.56 per Share in previous estimates. As you all know, earnings surprises are usually preceded by positive analyst revisions.
Marathon Oil is committed towards rewarding its shareholders. The company generated more that $2.2 billion in cash flow free of charge in 2021, which included $900 million in its fourth quarter. Marathon Oil returned more than 70% to investors its fourth-quarter cash flows. The company’s $0.07 per share first quarter dividend will be paid to all shareholders who were registered on February 16. The stock yields 1.3%.
I recommended the stock my Growth InvestorSubscribers about a month ago, as you can see below. Marathon oil continues to earn top marks on my Portfolio Grader.
The company receives a Total Grade A, a Fundamentals grade of B, and an Quantitative Grade A. This is indicative of institutional buying pressure.
Marathon Oils stock has risen more than 56% this year, crushing the S&P 500s6.2% fell over the same period.
Marathon Oil is not the only stock that I see benefiting from the current inflationary environment.
As always, a strong offense is our best defense Stocks that are fundamentally superiorThey are prospering due to inflation. It’s why Im so excited about what I do. Growth Investor stocks. I was expecting my Growth Investor Stocks forecasted sales declines and earnings forecasts will decrease due to more difficult year over year comparisons.
Thanks to new additions, however, Growth Investor Buy List. Inflation hedges are also a great option for many stocks on this Buy List. Growth InvestorStocks are now characterised by a 51.4% annual sales growth rate and a 370.9% annual earnings growth rate!
They have shown remarkable relative strength and are now enjoying quarter-end window dressing. Institutional investors are increasing their exposure to my stocks as these stocks will enhance their client portfolios.
I expect similar performance to the six new stocks that I will be acquiring to my portfolio. Growth InvestorFriday: Buy Lists After Friday’s close, I will reveal their names, tickers, and why they are my favorites. Sign up for my to get in on the action early. Growth InvestorGet your service now. (If I sign you up for my Platinum Growth Club and Omnia services, you will receive my most recent Growth InvestorRecommendations are not required, but you will still have full access and control over all my other services. This includes Breakthrough Stocks and Accelerated Profits, as well as Power Portfolio 2022 and Option Power.
Three of the new stocks are fertilizer firms that have benefited from the rise in natural gas prices and disruptions in fertilizer shipments from Russia/Ukraine.
Two new stocks include U.S. oil companies that are making a profit from high natural gas and crude oil prices. These companies are crucial to the U.S. becoming energy independent again. Finally, I am adding a supplier of building materials that is benefiting from the rising prices of building material.
This means that all our new purchases are poised for profit from the soaring inflation!
Click here to sign up for Growth Investor today.
P.S.Right nowWe are successful Americans because we have a bullseye on the back.
Our safety and prosperity are at risk.
We have lost the values we hold dear, such as individual freedom, hard work, and fiscal responsibility.
The US national deficit is growing at an unprecedented rate. More spending is expected.
The price of essential goods and services seems more expensive every day. Critical materials are in backorder for several months. Grocery store shelves are at half capacity.
You have to have money in savings. This could be in the stock exchange, in a pension plan, or under your bed.This should make your neck hair stand up..
This video will help you understand the enormity of the problem we are facing and how it affects our financial security and our way to live.I made a special presentation.
If you want your wealth to grow,I urge you to watch this video immediately.
The Editor discloses that, as of the date this email, the Editor directly or indirectly owns the following securities:
Marathon Oil Corp (MRO)
The post How to Profit in an Inflationary ClimateThis article was first published on InvestorPlace.
These views and opinions are solely the author’s and do not necessarily reflect the views of Nasdaq, Inc.
