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Happy Valentines Day:
Major Index Performances (as of Close Thursday):
- S&P 500: The benchmark index is up 1.5%.
- Dow Jones Industrial Average: The Dow Increased .92%
- Nasdaq Composite: The index is up 2.16%
- Gold: The Precious metal is up 2.21%, hitting an all-time high
Inflation Reports:
The Core Personal Consumption Expenditures (PCE), which is the Federal Reserve’s preferred inflation gauge, is set to be released on February 28th. We expect the latest print to be .30%, an increase from December. However, this will still lead to a decline in the year-over-year rate. Strong price increases in the key Consumer Price Index, (CPI), including accommodations, recreation services, and various nondurable goods, are contributing to the expected rise in January core PCE. Additionally, relevant Price Per Index, (PPI) components have surprised to the downside.
One inflation factor that is affecting millions of Americans and is now one of the top MEMEs on social media, is the price of Eggs. The national (average) price of eggs hit a new high in January, soaring more than 15% in a single month to $4.95 for a dozen large Grade A eggs. For more than two years, farmers have battled a deadly strain of bird flu that continues to disrupt the U.S. egg supply. Since October, widespread outbreaks of the virus across several states have severely impacted the U.S. chicken flock. The latest CPI report indicates that the price of eggs has risen 53% compared to one year ago. In contrast, overall food prices only increased by 2.5%. Of course, food prices in general are still elevated from record inflation that hit in 2021 and 2022.
Gold Continues its Win Streak:
Several factors are contributing to record prices on Gold. Domestically, higher inflation historically leads investors to purchase gold. This time around is no different. Globally, uncertainty regarding economic stability, geopolitical conflicts, and financial crises often makes traditional investments like stocks less appealing, therefore making Gold an attractive alternative. Many countries’ central banks, including China and Russia, have been stockpiling Gold to diversify away from holding too much U.S. currency.
Gold is also rising due to basic economic principles of supply and demand. Gold is a scarce resource and mining it has become increasingly expensive and difficult. When the supply tightens, and demand rises, prices naturally climb.
Although we reduced our holdings in Gold at the beginning of the year, it remains one of our largest holdings. This precious metal is a tool that helps us diversify while also acting as a hedge during volatile periods.
Enjoy your Valentine’s Day weekend.
Your OmniStar Investment Team.
