As we kick off a new year of trading, a number of investing themes are in play.
- Semiconductor stocks remain strong as demand for computer chips continues.
- Oil prices are on the rise again, a sign that economic activity is picking up.
- Speculative stocks with low (or negative) earnings are vulnerable to further selling.
- And inflation continues to be one of the biggest challenges that investors and consumers are worried about.
This year, I’ll be focusing on the plays that help you capitalize on these trends. And of course we’ll be keeping a tight handle on your investment risk.
Volatility works both ways… It can give us great opportunities to grow wealth. But if you’re on the wrong side of the trend, it can lead to losses. That’s why this year it’s incredibly important to stay on top of the emerging trends as the economy shifts from “recovery” to “steady growth” (hopefully).
Below, you’ll find the most relevant links for today’s trading. And be on the lookout for a lucrative project I’m working on to help grow your income this year! (More on that later today…)
2022 Themes: Inflation, Covid and Crypto
- WSJ: Less globalization leads to more inflation risk.
- Recent supply chain challenges may lead to “deglobalization.”
- This could lead to more goods being produced at higher costs.
- And with less international competition, long-term inflation may continue.
- Bloomberg: World hits record daily covid cases.
- There are more than 1.44 million worldwide infections reported.
- Although omicron infects 70 times faster than previous strains, it’s not as deadly.
- More infections are being found because of better testing and tracing methods.
- CoinDesk: A banner year for the crypto market.
- Last year, Bitcoin gained 40% in the first week of January.
- Elon Musk had a major influence on cryptocurrencies throughout 2021.
- Volatility and environmental concerns continue to challenge crypto investors.
- Bloomberg: Companies that held Bitcoin in 2021 kept up with S&P 500.
- Companies like MSTR, TSLA, COIN held Bitcoin on their balance sheets.
- These stocks kept up with the S&P 500 last year.
- But the stocks did not keep up with the overall rise in Bitcoin prices.
Government Spending Drives Consumer Demand
- CNBC: Still billions of relief funding left to spend.
- Congress approved $4.5 trillion in aid. Only $3.5T has been paid.
- Up to $500 billion may not end up being spent by agencies.
- Funds not spent will be returned for “other government uses.”
- CNBC: US goods trade deficit hits record in November.
- Goods exports declined 2.1% while imports rose by 4.7%
- Inventories increased, creating hope for an improvement to come.
- Trade deficits create a drag on GDP as production takes place abroad.
- NAR: Pending home sales fell 2.2% in November.
- Fewer contracts were signed as supply of homes for sale remain low.
- Housing demand continues to be high.
- Homes listed for sale go under contract in an average of 18 days.
- Reuters: US energy firms add oil, gas rigs for 17th month.
- Higher oil and gas prices create an incentive for more drilling activity.
- The number of active rigs increased by 17 in December.
- For the year, the number of active U.S. rigs increased by 235.
Can Last Year’s Themes Continue?
- Visual Capitalist: Companies that defined 2021.
- In the information age, attention is increasingly important for stock performance.
- 2021’s most popular stocks include Robinhood, Pfizer, Coinbase and more.
- Attention for many stocks has been fueled by message boards such as Reddit.
- McKinsey: How can the semiconductor industry keep outperforming?
- Semiconductor companies have increased profits compared to other industries.
- The healthiest companies continue to get even stronger.
- Merger and acquisition activity is important as companies build scale.
- Reuters: Weekly jobless claims drop showing no omicron hit yet.
- New jobless claims slid to their lowest post-pandemic level.
- Continuing claims also fell to their lowest level since March of 2020.
- Unemployment continues to be low due to a tight labor market.
- Bloomberg: China developers confront $197 billion challenge in January.
- The industry will need to find $197 billion to cover maturing bonds.
- January payments will be higher than November & December combined.