Inflation, Rate Hikes and JPMorgan Earnings: Forbes AI Newsletter

TLDR:

  1. Fake inflation report circulating ahead of official announcement of 9.1% CPI for the year to June
  2. More rate hikes are expected from the Fed, with some analysts forecasting a 1.00 percentage point hike to 2.75% by the end of July
  3. The second-quarter earnings season has begun as Wall Street pioneer JPMorgan announced a 28% drop in earnings

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Important events that could affect your portfolio

There’s a first time for everything, and to our knowledge, the first-ever fake press release from the US Bureau of Labor Statistics came out this week. Economic data like this doesn’t usually come with much fanfare, but inflation has rarely been this hot in more ways than one.

With CPI at historically high levels, investors are keen to know the latest numbers. Knowing this, con artists circulated a fake report stating that inflation hit 10.20% on Tuesday before the official announcement.

The report didn’t quite pass the sniff test, with a few notable flaws, including data in graphs not matching the text. Still, it went viral online, and Bloomberg reported a late-afternoon sell-off.

The US Bureau of Labor Statistics eventually released a statement debunking the report as a hoax and confirming that the official figures would be released on the morning of July 13. When the official announcement came, it was still not good news as inflation hit 9.1% in the 12 months to June, the highest in almost 41 years.

Why is that important?

The release all but confirms that another big rate hike is on the Fed’s agenda at its next meeting in late July, with some analysts now expecting a hike of 100 basis points, taking the Fed rate to 2.75%.

Against this economic background, the reporting season for the second quarter was eagerly awaited. JPMorgan started the process with a major failure that saw theirs quarterly earnings down 28%. Revenue and earnings-per-share numbers were not only lower than a year earlier, but also below analysts’ expectations.

The company’s CEO, Jamie Dimon, made headlines last month with comments that a “hurricane” was coming. In a call on Thursday, Dimon reiterated his concerns about the macro environment but backed away from the doomed mood in full, stating, “If we go into a recession, consumers are in good shape. If you talk to companies, you’d hear CEOs say it looks good, and I agree.”

JPMorgan is the largest bank in the US by assets, and for that reason can often be an indication of Wall Street’s overall health.

Why is that important?

In the coming days and weeks there will be a large number of announcements from companies from a wide variety of industries. Analysts are currently undecided on whether a recession is imminent, although there’s no denying that many companies have had a rough time so far in 2022.

This week’s hot topic from Q.ai

Inflation has been an issue for some time, but it seems to be gaining importance every month. Although the Fed has committed to significant rate hikes, it will likely take some time before this has a significant impact on inflation.

Some inflation is a positive and signals that an economy is growing. For investors, this generally means that companies will increase sales and profits, which will likely be reflected in rising share prices over the long term.

However, when the economy experiences a situation that is outside of the norm, such as B. record high inflation, investors can become nervous. This nervousness often leads to a flight from assets deemed “risky” such as stocks. B. stocks, and into assets that are considered safer.

That money has to go somewhere, and there are a few specific assets that have historically resisted the effects of inflation well. One of the most common is Treasury Inflation Protected Securities (TIPS), which are inflation-indexed US Treasury securities. As yields change, TIPS adjust their price to keep their real value stable.

Some of the more traditional assets that have proven effective as a hedge against inflation include precious metals such as gold and silver, as well as other commodities such as agricultural produce. We have bundled these assets in our inflation kit, uses AI to add a defensive dimension to a portfolio.

Top trading ideas

Here are some of the top ideas our AI systems recommend for the next week and month.

Dream Finder Houses (DFH) – The national house builder is on ours Top buys for next week with a B in our proprietary growth factor and trailing 12-month EPS growth of 3.46%.

Histogen Inc (HSTO) – The regenerative medicine company is a Top short for next week with our AI, she scored a D in our Technology and Quality Score factors. Their earnings per share for the 12 months ended March 2022 is -$5.29.

Xperi Holding Corp (XPER) – US technology and semiconductor company Xperi is a Top buy for the next month with an A in Quality Value and a B in Low Momentum Volatility, and analysts were expecting its revenue to grow by 6.51% in 2022.

Evofem Biosciences Inc (EVFM) – The women’s health company is a Top short for next month and our AI rates Evofem an F on Tech and Low Momentum Volatility and had an LTM EPS of -$19.01 through the end of March 2022.

Our AIs Top ETF trade for the next month is to invest in technology stocks and the retail sector while shorting fixed income and healthcare. top buys are ARK Autonomous Technology & Robotics ETF (ARKQ)SPDR FactSet Innovative Technology ETF (XITK) and SPDR S&P Retail ETF. top shorts are the iShares 1-3 Year Treasury Bond ETF (SHY) and the Invesco DWA Healthcare Momentum ETF.

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