Christmas is just a few days away, signaling that we are now halfway through a seasonally strong month for the stock market.
According to the folks at Bespoke, the S&P 500 has posted gains every December since 1983 and this year is no exception. The S&P entered the month up about 23%. It usually rallies an average 2.25% in December when the index is up over 10% in the first 11 months of the year.
December did get off to a rocky start, as investors were hit with disappointing economic data. Namely, the Consumer Price Index (CPI), Producer Price Index (PPI) and the November retail sales reports. The Labor Department recently reported that the CPI rose 0.8% in November, which was a bit higher than economists’ consensus estimate of a 0.7% rise.
The PPI surged 0.8% in November, which was the largest increase in the past four months. Wholesale food prices rose 1.2% in November, and energy prices surged 2.6%. Excluding food, energy and trade margins, the core PPI rose 0.7% in November, which demonstrates that wholesale inflation is no longer just related to higher food and energy prices.
The November retail sales report was, for lack of a better word, disastrous. The Commerce Department announced that retail sales rose only 0.3% in November, which was substantially below economists’ consensus estimate of a 0.8% increase. Excluding gas station sales, retail sales only rose 0.10%.
Gas station sales rose 1.7%, sales at restaurants and bars climbed 1% and at grocery stores 0.9%. Higher prices of living, with gas prices up nearly 60% and food prices up about 6%, are causing consumers to spend less.
But there were some bright spots. Despite supply chain issues and fears of a new COVID-19 variant, stores saw 48% more foot traffic this year, according to Sensormatic Solutions. Though this number is still a 28% drop from 2019’s pre-pandemic wave of holiday shoppers, it shows that people are getting more comfortable leaving their homes.
And online sales were shockingly unchanged. E-commerce sales were only slightly less than those of 2020’s on Black Friday and Thanksgiving, with shoppers spending $8.9 and $5.1 billion respectively. Cyber Monday shoppers spent $10.7 billion in total, according to Adobe Analytics.
The $109.8 billion spent on e-commerce from November 1-29 was up 11.9% year-over-year, marking a new U.S. milestone, according to Adobe.
So what do all these numbers tell us? Inflation isn’t going anywhere and consumers are spending more money at the pump.
That’s the bad news.
The good news is that in a roaring inflationary environment, residential real estate and stocks remain the best way to protect an investor from inflation, so stocks should reman an oasis for investors.
If you’re in the right high-quality companies, then your portfolio is well-positioned to make windfall profits in 2022.
And over the last three months, Eric Fry, Luke Lango and I have been putting together our stock market playbook to help you find those high-quality companies (one of which is a specialty retailer that continues to forecast strong earnings and sales growth). That research culminated into the event of the year: the Early Warning Summit 2022.
We believe we’re about to witness one of the biggest stock booms in U.S. history and now is the perfect time to “lock and load” for the New Year.
Our Power Portfolio 2022 is our exclusive guide for positioning your portfolio to take advantage of all that next year will have to offer investors. We’ve picked nine stocks we expect to crush the market in 2022.
So click here to find out what Eric, Luke and I see as the biggest and best profit opportunities for 2022.
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