Stocks That Benefit From Surging Inflation And The Coming Rate Hikes

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Inflation continues to rise in the United States with a 7% increase in the Consumer Price Index published by the Bureau of Labor Statistics in December 2021, the biggest 12-month increase since June 1982. The inflation metric also rose 0.5% from November’s level. The increase was driven by higher prices for housing, used vehicles and food, although energy prices eased slightly in December, after seeing much higher growth in 2021. Core CPI, which does not include energy and food, jumped 5.5% in one year. On a year-on-year basis, marking the highest levels since 1991.

Prices are generally driven higher due to supply-side disruptions and disruptions caused by the pandemic, contraction in the labor market, and unprecedented demand for goods and services following the easing of the lockdown. Now that daily US COVID-19 infections have increased by nearly 760,000 over the past week, driven by the spread of the highly contagious Omicron virus variant, continuing inflationary pressures could further disrupt supply. That being said, given that the Federal Reserve will follow through on its plans for several interest rate hikes this year, the first hike is likely in March.

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While stocks, in general, outperform bonds during periods of high inflation, our topic inflation stock This includes companies in the banking, insurance, consumer staples and energy sectors that may be more likely to benefit from higher inflation and possibly higher interest rates. Subject has delivered a solid 6% so far in 2022 compared to the S&P 500, which remains down about -2%. In 2021, Thiem delivered a return of about 21%, outperforming the S&P 500, which was about 27%. within our subject, Exxon Mobil Has been the strongest performer in the last 12 months with a growth of 49%. On the other hand, Citigroup It has been the weakest performer, with its stock remaining nearly flat over the past 12 months.

Below you’ll find our previous coverage of the inflation stock theme where you can track our outlook over time.

[11/15/2021] Exxon, US Bank: Stocks to watch as inflation hit 30-year high

Inflation in the US continues to rise, with the Consumer Price Index published by the Bureau of Labor Statistics last week showing a 6.2% increase in October from a year earlier. This marks the fastest annual growth in more than 30 years and an increase from the 5.4% level in September. There are some factors driving rising inflation, including higher energy and food prices, strong demand and supply chain issues after the opening of COVID-19, and severe labor shortages, pushing wages higher. Core CPI, which does not include energy and food, also jumped 4.6% on a year-on-year basis, marking the highest levels since August 1991. With inflation trending higher in recent months, there are concerns that inflation may not be temporary. As expected earlier.

While stocks, in general, outperform bonds during periods of high inflation, our topic inflation stock This includes companies in the banking, insurance, consumer staples and energy sectors that may be more likely to benefit from higher inflation. The theme is back approximately 25% year-over-year, roughly in line with the S&P 500. within our subject, Exxon Mobil Has been the strongest performer, growing 55% year-on-year. US Bank The stock has also performed well, gaining nearly 30% so far this year. On the other hand, Procter & Gamble
PG
It has been the weakest performer, with its stock up about 5% year-over-year.

[8/30/2021] Stocks to hit near 30-year high near US inflation

The Fed’s preferred measure of inflation, the price index for US consumer spending (PCE index), has been rising at 4.2% for the year ended July, its highest level in nearly 30 years, with inflation trends in the US. continues. In addition, core prices, which exclude volatile commodities such as food and energy, were up 3.6%. This number comes as a result of rising demand for goods and services that have outpaced the ability of supply chains to comply with the COVID-19 lockdown. While the central bank is optimistic that inflation will ease, given that monthly asset purchases are likely to drop by $120 billion this year, that number is well above the 2% inflation level the Fed is targeting.

That being said, we think inflation may still remain slightly higher than historical levels for some time. For example, increased personal savings during the pandemic and the continuation of a low interest rate environment over the next two years could also lead to higher pricing for goods and services. our subject inflation stock This includes companies in the banking, insurance, consumer staples and energy sectors that may remain stagnant or potentially even benefit from higher inflation. The theme is back about 15% year-over-year compared to the S&P 500, which is up about 18%. within our subject, Exxon Mobil Has been the strongest performer, growing 28% year-on-year. kiss The stock has also performed well, gaining nearly 20% so far this year. On the other hand, Procter & Gamble It has been the weakest performer, with its stock rising nearly 4% year-over-year.

[7/16/2021] How equity investors can benefit from rising US inflation

US inflation data for the month of June rose at the fastest pace since 2008, as the economic recovery following the COVID-19-related lockdowns picks up. According to the Labor Department, the consumer-price index rose 5.4% from a year ago, while the core price index, which does not include food and energy, rose 4.5% over the previous year. The rise in prices has been due to increased demand for goods and services, which has outstripped the ability of companies to sustain. While supply-side constraints should be eased in the coming quarters, factors such as significant stimulus funding, an increase in the US personal savings rate and a continuing low interest rate environment over the next two years could mean inflation is likely to be near. Will remain at high level in future.

So how should equity investors handle the current inflationary environment? our subject inflation stock This includes companies in the banking, insurance, consumer staples and energy sectors that may remain stagnant or potentially even benefit from higher inflation. Theme has returned approximately 16% year-over-year, roughly in line with the S&P 500. However, it has underperformed since the end of 2019, remaining almost flat compared to the S&P 500, which is up about 35%. oil and gas major Exxon Mobil Our theme has been the strongest performer, growing approximately 43% year-over-year. On the other hand, Procter & Gamble underperformed, with the stock remaining almost flat.

[6/17/2021] Stocks to play rising inflation

US inflation continues to be high as abundant liquidity, rising demand and supply-side constraints after the Covid-19 lockdown are putting pressure on prices. On Wednesday, the Federal Reserve significantly raised its expectations for inflation for 2021, predicting that prices for personal consumption spending – its preferred inflation measure – could rise 3.4% this year, up from 2.4% in March. is one full percentage point ahead of the projection. The central bank did not change its aggressive bond-buying program and also indicated that interest rates would remain close to 0%, although it indicated two rate hikes in 2023.

So how should equity investors handle the current inflationary environment and the prospect of higher interest rates? our subject inflation stock This includes banking, insurance, consumer staples and energy sector stocks that may remain stable or potentially benefit from higher inflation rates. The theme has delivered a return of approximately 17% year-over-year, compared to a return of approximately 13% on the S&P 500. Compared to the S&P 500, however, it has underperformed since late 2019, which is almost flat. Nearly 31 per cent up. oil and gas major Exxon Mobil Our theme has been the strongest performer, growing approximately 56% year-over-year. On the other hand, Procter & Gamble Its stock has underperformed this year, with its stock down about 5%.

[5/27/2021] rising inflation theme

Inflation continues to be high, due to expansionary monetary policy by central banks, increased demand for commodities after the COVID-19 lockdown, moves by companies to replenish or build up inventory, and also due to significant supply-side constraints. Inflation now appears to be here with a 10-year breakeven inflation rate, which puts the projected inflation rate over the next ten years at around 2.4%, around the highest level since 2013. [1]

So how should equity investors handle the current inflationary environment? our subject Stocks to play rising inflation This includes stocks that may remain stable or potentially benefit from higher inflation rates. Theme has outperformed, returning about 18% year-over-year, compared to a return of about 12% on the S&P 500. However, it has been underperforming since the end of 2019, returning only to 30% compared to 1%. S&P 500. The themes mainly include banking, insurance, consumer staples and energy sector stocks, which benefit from higher inflation in the long run. We have excluded sectors such as metals, building materials and semiconductor manufacturing, which have performed very well through the initial reopening, but are poised to peak. Here’s a little more about stocks and sectors in our topic.

Banking Stocks: Banks withdraw money…

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