Inflation is the number one villain for investors today.
And more importantly, inflation is causing huge challenges for American families like yours and mine.
Inflation driving the price of just about everything we buy higher. And at the same time, it’s also a factor driving the value of our investments lower.
Last month, inflation gauges like the Consumer Price Index (or CPI) and Producer Price Index (PPI) hit alarmingly high levels… Not Good!
But as I mentioned last week — while the numbers look horrible, the inflation situation may actually be improving.
And yesterday, we got some additional good news on inflation from Apple Inc. (AAPL).
Now that good news was disguised as a warning. But today, I want to explain the truth behind Apple’s announcement.
Inflation’s Many Drivers
Last week we talked about some of the big inflation components — like energy prices, food costs, and high rents.
I pointed out how oil and gasoline prices are actually falling. And many commodities like grains and metals are pulling back.
Even rent and housing inflation could slow with higher interest rates.
But one force we didn’t talk about was the red-hot job market.
For more than a year now, businesses have been struggling to find qualified workers to fill positions. And these companies have been willing to pay top dollar for anyone willing to come work for them.
This situation is incredibly inflationary. Because companies are paying more for cashiers, servers, and line workers… And they’re also paying more for software engineers, architects, and other highly skilled professionals.
Higher wages mean employees have more money to spend. (That’s inflationary.)
And it also means companies need to raise prices to pay for more expensive workers. (Also inflationary.)
That’s why Apple’s “warning” could actually be very good news for the market — and for our economy.
Apple Slows Hiring — And They’ve Got Company!
Yesterday, Bloomberg published a report that Apple Inc. has decided to slow hiring over the next year.
The news caught investors off-guard. And it raised fears that Apple may not be growing as quickly as Wall Street is expecting.
Obviously, that’s not good news for Apple. And while Apple is the latest large company to adjust plans for hiring, they’re certainly not the only company making decisions like this.
Tesla’s Elon Musk ruffled feathers last month when he discussed laying off a large portion of the company’s workforce. And big tech companies like Meta Platforms (META), Microsoft (MSFT), and Amazon (AMZN) have all made decisions to reduce hiring or even lay off workers.
Of course, it’s never a good thing to see companies laying off workers or deciding not to hire.
But these decisions do indicate some relief for the red-hot job market. And over the next few months, these hiring decisions could put take another chunk out of inflation levels.
That’s actually good news for the market. And it’s good news for our economy as well.
(Keep in mind, that there are still roughly 2 job openings for every unemployed worker in America. So most workers can still find jobs to support their families.)
I still believe inflation is in the process of moving lower. And any positive news on this front could ignite a strong bear market rally.
That’s why it’s so important to have your watch list ready — so you can invest wisely as the market starts to rebound.
If you’d like to see the real-time stocks on my personal watch list, be sure to subscribe to my 20/20 Watch List.
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Here’s to growing and protecting your wealth!