To The Moon

On Wed, 12 Feb 2025, US stocks fell after the first inflation readout for 2025, stoking investors’ concerns about stubborn price pressures and reignited worries that interest rates might not come down as expected. Wall Street attempted to explain that: It is likely (partly) due to businesses raising prices at the start of the year. As evident in a record surge in (a) cost of prescription medication and (b) increase in motor vehicle insurance. Historically, January CPI report follows a pattern of CPI numbers overshooting expectations every January. This is because, the “seasonal adjustment” factors used in the data modelling by US’s Bureau of Labor Statistics (BLS) to derive inflation, failed to fully account for the one-off turn-of-year price hikes. Nonetheless, they said the so-called residual seasonality was not responsible for all of the broad rise in prices All these are taking place before even taking into considerations the effects of the tariffs imposed by the returned President since 20 January 2025, that economists have panned as inflationary. Will the cowboy President heed the cautionary note ? Very much doubt it. Consumer Price Index - January 2025. Headline inflation. Monthly: was 0.5% vs expected 0.3% vs december’s 0.4%. This was the biggest jump since August 2023’s 0.6%. Annual: was 3.0% vs expected 2.9% vs december’s 2.9%. (see above) Core inflation. Monthly: was 0.4% vs expected 0.3% vs december’s 0.2%. Annual: was 3.3% vs expected 3.1% vs december’s 3.2%. (see above) In the 12 months through January, the CPI increased 3.0%. That was the biggest gain since June 2024 and followed a 2.9% advance in December. CPI Components with Biggest Gains. Top 3 components in the basket of goods used to derive inflation: Shelter (including hotels & motel rooms) increased 0.4% and accounted for nearly 30% of the rise in the CPI. This followed 2 straight monthly gains of at least 0.3%. Food prices rose 0.4% after increasing 0.3% in December. Cost of eggs soaring 15.2%, the largest increase since June 2015, due to avian flu outbreak that resulted in shortage of eggs. Gasoline / Fuel prices increased 1.8% while natural gas cost 1.8% more. Electricity prices however, were unchanged. By the time market called it a day, DJIA: -0.50% (-225.09 to 44,368.56). S&P 500: -0.21% (-16.53 to 6,051.97). Nasdaq: +0.03% (+6.10 to 19,649.95). Inflation is Staying? In my Wed, 12 Feb 2025 post, I have talked about a possible “tariff-proof” stock - the FAANG’s Netflix (NFLX)$. (click here ! for details, help to Repost and give a Like ok) as a possible investment option. With January 2025 CPI data out and US inflation has risen instead of fallen, it is likely that Fed’s preferred inflation report - the personal consumption expenditure (PCE) report will not be vastly different come 28 Feb 2025, (see below) Comparatively if you asked me, I think the PCE is “slightly” more sensitive to data movement. This is probably due to the larger data set sampled. Inflation Proof Sectors. With rising inflation looking plausible, is it time to rebalance our holdings and shift into inflation-proof stocks instead? Historically, below 3 sectors are often considered recession-proof due to their stable demand even during economic downturns: Energy: Energy prices often rise during inflationary periods, benefiting companies in this sector. Real Estate: Real estate can act as a hedge against inflation, as property values and rental incomes tend to increase. Basic Materials: Companies in this sector, such as those involved in mining and manufacturing, can pass on higher costs to consumers, maintaining profitability. Due to real estate, I will channel my attention to one stock on Energy sector stocks. Based on ChatGPT and Gemini, the 3 “consensus” stocks are: (see above) $Exxon Mobil(XOM)$. $Chevron(CVX)$. $ConocoPhillips(COP)$. On 25 Apr 2024, I had covered on XOM, (click here ! for details) will continue with XOM today. Exxon Mobil (XOM) is a compelling buy due to its strong performance in key projects and resilience against inflationary pressures, making it a stable investment amidst the economic uncertainties caused by recent US tariffs Q4 Earnings. On 31 Jan 2025, XOM released its latest quarterly earnings: Earnings per share (EPS): $1.67 per share adjusted vs analyst estimates of $1.56, as per LSEG data. Revenue: $82.3 billion down -0.52% YoY. Net income: $7.61 billion, down -0.26% YoY. Exxon Mobil beat Wall Street’s estimate for fourth-quarter profit as higher oil and gas production offset lower oil prices and weaker refining margins. In 2025, refining business remains under pressure as the additional supply enters the market. Legal wise, Exxonmobil expects a decision by September 2025, in its arbitration challenge to Chevron’s acquisition of oil producer Hess. The #1 US oil producer is still hopeful as Exxon and China’s CNOOC, Hess’ partners in the Guyana oil joint venture, said they have a contractual first right to buy Hess’ stake. Analysts’ Forecast. Exxon Mobil’s overall outlook remains positive. XOM’s short-term Wall Street average price target is +21.2% higher than the last closing price of $107.09. Its highest target set at $147, representing a potential upside of +37.3%. Investors with XOM shares could consider holding for a wee longer. For myself, I am going to restart monitoring of XOM, after going on a hiatus, with focus on AI stocks. Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks. NFLX : Tariff-Proof "Buy" In Troubled US Mkt ? GOOG vs TSLA : Self Driving War Heats Up ? US DeepSeek takes root. NVDA, OpenAI Doomed ? Do you think Energy stocks are wise options in times of inflation re-appearance ? Do you think XOM is the best out there or are there more premium stocks ? If you find this post interesting, give it wings! ️ Repost and share the insights ? Do consider “Follow me” and get firsthand read of my daily new post. Thank you. @Daily_Discussion @TigerPM @TigerStars @Tiger_SG @TigerEvents