Stock Market Insights

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I’m seeing a lot of pictures of gas pumps on Facebook and Twitter lately. It seems most of you aren’t thrilled with the expensive gas we are all buying right now.

We now have October’s inflation numbers, and they weren’t good. In fact, they were much worse than expected. The consumer price index (CPI) grew 6.2% since October 2020, according to Labor Department data released November 10, 2021. The CPI rose 0.9% from September to October, the largest one-month gain in four months and the fifth month in a roll of inflation above 5%.

This report shows that inflation in America rose at the fastest annual pace since 1990. This makes for significant price increases to most things we buy from groceries to cars.

Higher prices for energy, housing, food, and vehicles are wiping out any salary raises employees received in the last year because their dollars don’t buy as much as they used to. That’s because the companies are having to raise prices to offset their rising expenses to keep their investors happy.

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Kevin Ozan, who is the Chief Financial Officer for McDonald’s Corp spent considerable time on McDonald’s Oct. 27 earnings call discussing how they planned to continue to raise prices to stay profitable according to Blumberg. Procter & Gamble Co. CFO Andre Schulten told their investors on their Oct. 19 earnings call that they “have now announced pricing in nine out of ten categories” of the products they sell.

With the rising inflation, the Federal Reserve is projected to begin raising rates next year. This would not be a good time to tie up too much of your money in any long-term bonds or certificates of deposits because you could miss out on higher rates later.

Value stocks usually perform better than growth stocks in an inflationary environment. That is because Growth stocks expect to earn most of their cash flow in the future, but as inflation increases those future cash flows are less valuable.

My 18-year-old daughter, who we jokingly say has “wheels on her butt” because she wants to just go go go, actually rode with a friend last weekend. I know how much she loves to drive and asked her why she rode with a friend, and she said, “Dad, these gas prices are cutting into my fancy coffee money!”

Here’s hoping your salary and investments go up with inflation.

Have a blessed week!

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary, therefore, the information should be relied upon only when coordinated with individual professional advice. Past performance is no guarantee of future results. Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd, Suite #150, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”). Securities offered by Registered Representatives through Private Client Services, Member FINRA/SIPC. PCIA and Private Client Services are separate entities and are not affiliated. Dr. Baker has attained his D.Min., the designation for Doctor of Ministry, and his AIF®, the designation for Accredited Investment Fiduciary®.

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