CPI Hints Inflation Is Here to Stay

CPI on Inflation

This morning’s Consumer Price Index was not surprising in the least. As always, I’m surprised by the media’s reaction to it. But at least they got the headlines correct. The CPI increased by 5% in May from the same period in 2020. That was the fastest increase since 2008, and it surpassed expectations of 4.7%. Now, as I noted yesterday, a second reading of the index will exclude food and energy. The Labor Department makes this estimate on the argument that food and energy are volatile.

Okay then. Let’s find out what the measure less food and energy says. It was 3.8%. That was the highest pace since June 1992. And it’s a sign that inflation – real inflation – is here for the time being. Not much is immune to this wave of higher costs.

Want to hear something crazy? My used Honda HR-V is now selling on the market about 14% higher, according to Kelley Blue Book, than it did a year ago. Airfares are on the rise. Semiconductors are surging. Raw materials are going through the roof.

The question moving forward is whether this inflation is going to stay or not. Many government officials and economists think that these price increases will drop or fade over time. I think they should have to put their jobs on the line if they are incorrect.

Meanwhile, anyone sitting on cash has watched its purchasing power erode. As a result, your savings account is probably paying you less than 0.1%. Now’s the time to look for alternatives.

As a way to play and beat inflation, I like the entire energy sector, real estate investment trusts (REITs), gold miners, silver miners, and companies who have consistently been paying off debt.

What’s on My Radar Right Now

For today, I’ve been looking for other opportunities to play rising energy prices. The one that stands out for me right now is US Silica Holdings (NYSE:SLCA).

This is a Texas-based firm that engages in the production of fracking sand. Fracking materials are essential to the production of oil and gas. More producers will bring rigs online with oil prices rising and require a wealth of different inputs to get their crude out of the ground.

I’m looking at this chart right now and looking at a situation where we see the 20-day moving average is trying to stay above the 50-day moving average. If it can break higher, that would be a positive signal for traders.

Inflation Example Chart

I’m just looking for a bit of love from the markets. If buying volume picks up, this could be a breakout stock for the months ahead. So keep this on your watchlists. This could catch momentum and run.

However, if it breaks down, I’ll look for a potential entry point on this stock in the $10.00 range. I think this is a forgotten part of the energy sector ripe for a nice run.

Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.
Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.

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