Six inflation-protection investments to buy present paths for profiting despite Russia’s raging invasion of Ukraine, the highest inflation in more than 40 years, the Fed’s plan for further interest rate hikes to slow price increases and a rocketing national debt that has soared to $30.48 trillion.
The Consumer Price Index (CPI) surged 7% in 2021, then spiked to an annual rate of 8.5% in March before dipping slightly to 8.3% in April. The U.S. Bureau of Labor Statistics (BLS) reported that the largest contributors to inflation in April occurred among indexes for shelter, food, airline fares and new vehicles on a seasonally adjusted basis.
The energy index jumped 30.3% in the past year, while energy commodities zoomed 44.71% during the last 12 months. The food index rose 9.4%, the largest 12-month increase since the period ending April 1981. From March to April 2022, the food index increased 0.9%, while the food at home index climbed 1.0% for the same month, the BLS reported.
Six Inflation-Protection Investments to Buy as EU Cuts Import of Russian Oil
The 27-nation European Union voted on Tuesday, May 31, to remove 90% of its Russian crude oil imports in 2022 to limit funds that could be used to sustain the nation’s ongoing attack of Ukraine. The vote exempted Hungary, the Czech Republic and Slovakia, as well as oil delivered by pipeline rather than ships. Other countries such as the United States, the United Kingdom, Canada, Japan, South Korea, Australia and others previously placed economic sanctions on Russia as a significant producer of oil, natural gas and grain to pressure Putin to withdraw his troops from Ukraine.
Commodity prices such as for oil, natural gas and grains have risen since Russia’s Feb. 24 invasion of Ukraine that has been called a “special military operation” by the attacking nation’s President Vladimir Putin. However, the actions of Russian troops have included the shelling of hospitals, schools, residential areas, churches, nuclear power plants, oil refineries and a theater used as a shelter, along with reports of carrying out brutal rapes, torture and outright executions of Ukrainian civilians.
Those actions caused leaders such as Ukraine’s President Volodymyr Zelenskyy, U.S. President Joe Biden, U.K. Prime Minister Boris Johnson, France’s President Emmanuel Macron and European Commission President Ursula von der Leyen to accuse Putin of war crimes.
Even German President Frank-Walter Steinmeier, who has had close ties with Russia in the past, said Putin and his Foreign Minister Sergey Lavrov should face a war crimes tribunal. President Steinmeier added that the invasion “shocks” him, not expecting that Putin would risk the “total political, economic and moral ruin” of his country in an act of “imperial madness.”
Six Inflation-Protection Investments to Buy as Oil Prices Keep Rising
The United States ranks as the world’s top oil producer, with Russia and Saudi Arabia following closely behind. With Russia providing roughly 10% of the world’s oil, the price of WTI Crude reached $115.17 per barrel on May 31, following the EU’s vote. For American oil users, the average price of regular gas hit a record $4.62 per gallon on that date to mark a 51.69% jump in the past year.
One way for investors to profit from the continuing rise of oil prices is to buy shares of an oil producer such as Houston-based Enterprise Products Partners (NYSE: EPD). The stock has jumped more than up 29.92% year to date to rank as the “best performer” during that time in the Forecasts & Strategies investment newsletter led by Mark Skousen, PhD.
Chart courtesy of www.stockcharts.com
Skousen, who also leads the Five Star Trader, Home Run Trader, Fast Money Alert and TNT Trader services, recently served as a key speaker at the Vancouver Resource Investment Conference and recommended oil as an investment, especially for those seeking inflation protection. I bought shares of Enterprise Products Partners shortly after the 2020 stock market crash to benefit from what I viewed as an inevitable recovery.
Mark Skousen, head of Forecasts & Strategies, meets with Paul Dykewicz.
The stock is projected to keep climbing along with oil prices as Russia continues waging war in eastern Ukraine and seizing control of additional land in its industrial Donbas region in violation of international law. News reports on May 31 quoted Mayor Oleksandr Striuk of the eastern Ukrainian city of Sievierodonetsk as saying Putin’s forces are advancing block by block amid heavy street fighting with artillery barrages that are threatening the lives of an estimated 13,000 civilians taking shelter there. The city had a pre-invasion population of more than 100,000 people.
EPD Kicks off Six Inflation-Protection Investments to Buy
Enterprise Products Partners is one of the largest publicly traded partnerships and a key North American provider of midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products and petrochemicals. In addition, the company’s services include natural gas gathering, treating, processing, transportation and storage.
The company further provides NGL transportation, fractionation, storage and import and export terminals. It also offers crude oil gathering, transportation, storage and terminals, along with petrochemical and refined products transportation, storage and terminals, as well as a marine transportation business.
Many other oil and natural gas companies offer inflation protection, too. They range from large to small public companies.
Exxon Mobil Joins Six Inflation-Protection Investments to Buy
Irving, Texas-based Exxon Mobil (NYSE: XOM), another inflation-protection stock, is one of the biggest producers of oil and natural gas worldwide. The ascent of the stock has slowed in the past week, but it still gained 1.69% during that time, 13.64% in the past month, 23.54% in the past three months, 59.76% so far in 2022 and 70.48% in the past year, as of March 31.
Amid an ongoing bull market in oil, Exxon Mobil became a recommendation in the Fast Money Alert advisory service co-led by Skousen and Jim Woods. Exxon Mobil is one of the biggest and best large-cap energy companies in the world, they wrote to their subscribers.
Paul Dykewicz meets with Jim Woods, who leads the Successful Investing and Intelligence Report investment newsletters.
In 2021, Exxon Mobil, the world’s largest refiner, produced 2.3 million barrels of liquids and 8.5 billion cubic feet of natural gas per day. At the end of 2021, its reserves reached 18.5 billion barrels of oil equivalent, 66% of which were liquids. The company’s global refining capacity totals 4.6 million barrels of oil per day and ranks as one of the biggest manufacturers of commodity and specialty chemicals.
As oil prices have soared due to a combination of robust demand dynamics and constricted supply partly due to Russia’s invasion of Ukraine, Skousen and Woods wrote that the “smart money” is betting on higher energy prices. Even smarter, faster money is betting on XOM, they added.
Chart courtesy of www.stockcharts.com
CRK Joins Six Inflation-Protection Investments to Buy
Comstock Resources, Inc. (NYSE: CRK), an energy company based in Frisco, Texas, is a recent recommendation in the Bullseye Stock Trader advisory service led by Woods. The stock has surged more than 22% in less than two weeks. Woods also recommended call options that quickly rose more than 100% and advised his subscribers to sell half to lock in that big gain, while retaining the rest for potential additional profits.
He also raised his stop price on the stock to help protect that paper profit from slipping away. That technique is a favorite strategy for investment guides like Woods to ensure subscribers close trades positively rather than leave a big gain at risk of a plunge.
Comstock is an independent energy company that operates primarily in the Haynesville shale, a natural gas basin in East Texas and North Louisiana that offers superior economics and geographical proximity to the Gulf Coast markets. The company acquires, develops, produces and explores for oil and natural gas. The stock gained the attention of Woods when it vaulted into the top 1% of all public companies on a relative strength basis.
Chart courtesy of www.stockcharts.com
BCC Gains Place with Six Inflation-Protection Investments to Buy
Woods, who also heads the Successful Investing and Intelligence Report investment newsletters, added a new recommendation to his Bullseye Stock Trader advisory service that is involved in another commodity sector sweet spot: lumber and wood. He chose Boise Cascade Co. (NYSE: BCC), of Boise, Idaho.
Boise Cascade is a producer of engineered wood products (EWP) and plywood. The company operates in two segments, Wood Products and Building Materials Distribution.
The Wood Products segment manufactures EWP, consisting of laminated veneer lumber (LVL), I-joists and laminated beams. The Building Materials Distribution segment is engaged as a wholesaler of building materials.
Boise Cascade distributes products such as plywood and lumber items such as siding, doors, metal products, insulation and roofing, EWP and others. The company generates a majority of its revenue from the Building Materials Distribution segment.
Chart courtesy of www.stockcharts.com
ETF Gains Place with Six Inflation-Protection Investments to Buy
The Harbor All-Weather Inflation Focus ETF (HGER), designed as a commodities futures exchange-traded fund (ETF) to hedge against inflation, is a fund that I learned about from Michelle Connell, a former portfolio manager who heads Dallas-based Portia Capital Management. The fund is sub-advised by Quantix Commodities LP, a commodities solution boutique firm of former senior Goldman Sachs traders.
HGER, intended to guard against the detrimental effects of inflation, weighs multiple factors such as money supply, wage growth, supply chain constraints, surging demand for goods and chronic underinvestment in commodities. The ETF allows investors a way to protect themselves in an Inflationary environment by using commodity futures that have a proven record of providing diversification and a safe haven during rising prices.
In contrast, broad-based commodity indices are not designed with Inflation protection as a targeted objective, according to HGER’s managers. To that end, Harbor All-Weather Inflation Focus ETF developed an inflationary hedging index with Quantix Commodities LP to help both institutional and retail investors seek to profit from rising consumer prices.
The ETF is worth considering at a time when the Consumer Price Index (CPI) has risen during the past year to levels not seen in recent history. Connell has been researching and monitoring the fledging fund that launched earlier this year as an possible inflation-protection strategy.
Chart courtesy of www.stockcharts.com
Deere Plows Among Six Inflation-Protection Investments to Buy
Farm machinery company Deere (NYSE: DE), of Moline, Illinois, offers an inflation hedge in the agricultural field. The stock’s 14% share price plunge after it recently reported earnings offers a discounted entry opportunity, Connell said.
Michelle Connell, CEO, Portia Capital Management
Deere’s key issues are supply-related, since demand for agricultural equipment remains robust, especially by making machinery that is more environmentally friendly than its rivals, Connell continued. The company also has a feature that can block the operation of the machinery if it stolen. That has prevented Deere machinery pilfered from Ukraine during Russia’s invasion from operating for the thieves who stole it.
Wall Street analysts expect Deere to have a better story and performance in the second half of 2022 and in full-year 2023, Connell counseled. She cited the following to support her recommendation:
-More than half its revenues come from large agriculture.
-If the war in Ukraine continues, U.S. farmers will benefit from higher prices for their crops.
-Increased agricultural profits mean that that farmers and farming corporations will be more likely to buy large, expensive farm equipment.
Deere has fallen back since its recent high on April 20, so investors should be able to purchase shares at reduced prices, Connell continued.
Chart courtesy of www.stockcharts.com
Six Inflation-Protection Investments to Buy as Russia Steals Grain
With significant producers of grain such as Russia and Ukraine not providing their usual supply amid Putin’s war, farm machinery may be aided by increased demand. European Commission President von der Leyen cautioned this week that Russia is weaponizing food supplies as prices of grain, cooking oil and other food commodities rise after the Putin-ordered invasion of Ukraine, one of the world’s largest wheat producers.
In the industrial part of Ukraine that Russia is occupying and attacking to seize land, Putin’s army is confiscating grain stocks and machinery, von der Leyen said. Russian warships in the Black Sea are blockading Ukrainian ships from exporting full loads of wheat and sunflower seeds, she added during a May 24 address at the World Economic Forum in Davos, Switzerland.
Russia is hoarding its own food exports as a form of blackmail by holding back supplies to increase global prices, or trading wheat in exchange for political support for its invasion of Ukraine, von der Leyen said. In effect, Russian leaders are using hunger and grain to wield power, she added.
Supply Chains Should Recover as China Eases COVID-19 Curbs
China’s economic center of Shanghai is easing its two-month lockdown to prevent the spread of COVID-19, while raising the outlook among analysts that goods may start to flow normally again in the weeks and months ahead. China’s lockdowns have affected an estimated 373 million people, including roughly 40% of the country’s gross domestic product (GDP).
Disrupted supply chains hindered the supply of products such as rice, oil and natural gas. Shanghai, home to the world’s largest port and 25 million residents, has strained to unload cargo due to strict regulations that have caused shipping containers to stack up.
Some Shanghai residents posted videos online to complain about needing food during the lockdown, even though government officials tried to block such public expressions of frustration. Chinese authorities further drew public criticism for forcibly separating young children with COVID-19 from their parents in an attempt to stop the spread of the contagious subvariant of Omicron, BA.2. The variant also has been causing new infections in European countries such as Germany, the Netherlands and Switzerland.
U.S. COVID Deaths Rise Beyond 1 Million
U.S. COVID-19 deaths have climbed to 1,007,032, as of May 31, according to Johns Hopkins University. Cases in the United States on that date hit 84,210,808. America retains the dreaded distinction as the country with the highest numbers of COVID-19 deaths and cases.
COVID-19 deaths worldwide totaled 6,292,450 on May 31, according to Johns Hopkins. Cases across the globe have climbed to 530,016,245.
Roughly 77.9% of the U.S. population, or 258,586,526, have obtained at least one dose of a COVID-19 vaccine, as of May 31, the CDC reported. Fully vaccinated people total 221,292,360, or 66.7%, of America’s population, according to the CDC. The United States also has given at least one COVID-19 booster vaccine to 103.4 million people, up more than 500,000 in the past week.
Unclear is whether data released on May 24 about a high percentage of “long-haul” COVID patients enduring persistent symptoms may lead to Medicare relaxing the requirements for seniors to start walking again before no longer funding physical therapy for them. The Northwestern Medicine Neuro COVID-19 Clinic found that most of the 52 patients monitored in its study reported “brain fog,” numbness or tingling, headaches, dizziness, blurred vision and fatigue, even 15 months after diagnoses of COVID-19.
The six inflation-protection investments to buy are intended to guard against rising prices and produce profitable exposure to equities. Despite the market’s volatility, the highest inflation in 40 years, the Fed’s plan for further interest rate hikes to limit price hikes and increasing federal deficits, investors still have viable ways to profit.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.
