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The Inflation Statistics Are Going To Be Hideous

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In his Daily Market Notes report to investors, while commenting on the the inflation statistics, Louis Navellier wrote:

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Shorts Retreat

So first and foremost, earnings are working. They are drop-kicking value stocks higher. That's the good news.

This is the second day in a row of short covering. So a lot of growth stocks that were beaten up are just reversing out of nowhere. There was a lot of short covering on Friday, and you have a huge follow-through today.

Now what's also interesting is the dividend stocks, the dividend growth stocks that had been an oasis aren't doing as well today. So we're in this rotation now.  I don't write the algorithms that say buy dividend, sell growth or buy growth, sell dividend, but somebody is.

Washing Machine Is Back

It is short covering, but that's how bear markets and corrections end. Dividend stocks are now starting to get spanked a bit so we're getting back to our normal washing machine market. But it is every stock for itself and thank God our new earnings season is here because it's making a lot of short run for cover.

The other thing that's going on is Treasury bond yields remain remarkably well behaved. And I picked it up from Jerome Powell's press conference last week, but I don't know if many other people did, but he admitted that they cannot raise rates as much as some folks may want them to because of interest rate pressures overseas. 

When we raise rates, Europe stays flat to negative. We just make the dollar strong and money pours into America. And that strong dollar is causing all the buying pressure in our Treasuries, which is why the Fed can withdraw its quantitative easing. So things are looking awfully good here.

Obviously, we have soaring natural gas prices. We have soaring crude oil prices.  A lot of it is weather-related because of what happened on the weekend on the East Coast. But it's snowed in the south too. It's cold everywhere.

Be Wary February 8

So what's happening is that the inflation statistics are going to come out around, I believe, February 8 and 9th. The consumer price index and the producer price index are going to be hideous. 

You think the inflation has been bad now, but wait till you see those numbers. And then there will be a lot of pressure on the Fed and on politicians. 

Energy is playing huge politics over there in Europe, where Germany is essentially sided with Russia. And so whatever happens in Ukraine isn't going to be opposed by Germany. 

But I do want you to know that the energy inflation is going to be the big shock. And the shock is going to come February 8.