Stock News

BofA warns that hot inflation might run rampant for another 10 years — here’s the 1 shockproof sector that could preserve your wealth under that worst-case scenario

0

S&P 500

3,675.89

+92.82(+2.59%)

 

Dow 30

30,170.60

+535.77(+1.81%)

 

Nasdaq

10,655.44

+334.06(+3.24%)

 

Russell 2000

1,734.25

+51.85(+3.08%)

 

Crude Oil

86.33

+0.72(+0.84%)

 

Gold

1,666.50

+17.60(+1.07%)

 

Silver

18.66

+0.59(+3.26%)

 

EUR/USD

0.9843

+0.0119(+1.22%)

 

10-Yr Bond

3.9770

-0.0330(-0.82%)

 

GBP/USD

1.1395

+0.0215(+1.92%)

 

USD/JPY

148.7990

+0.0790(+0.05%)

 

BTC-USD

19,517.27

+379.62(+1.98%)

 

CMC Crypto 200

443.74

+8.27(+1.90%)

 

FTSE 100

6,920.24

+61.45(+0.90%)

 

Nikkei 225

26,775.79

-314.97(-1.16%)

 

BofA warns that hot inflation might run rampant for another 10 years — here’s the 1 shockproof sector that could preserve your wealth under that worst-case scenario

Despite the U.S. Federal Reserve’s aggressive rate hikes — including three consecutive hikes of 75 basis points — inflation is still running hot.

Consumer prices in the U.S. climbed 0.4% in September and were up 8.2% from a year ago.

High inflation not only erodes the purchasing power of money but also means the Fed will likely remain hawkish. And that does not bode well for the stock market.

Will inflation go back to normal anytime soon?

Bank of America doesn’t believe so.

“Historically, it takes an average of 10 years for a developed economy to return to 2% inflation [once] the 5% threshold is breached,” the bank says in a recent note.

Don’t miss

The S&P 500 is down 24% this year — but this vintage asset class is up 14%. Here’s how wine can add some body to your portfolio

Invest your spare change and turn your pennies into a productive portfolio

You could be the landlord of Walmart, Whole Foods and Kroger

BofA highlights sticky wage inflation, population aging, and underinvestment in energy as reasons why price levels would remain elevated. According to BofA’s projection, oil prices would average $100 per barrel next year.

If BofA is right, energy stocks might see even better days ahead. Here’s a look at two energy names that the bank finds particularly attractive.

Exxon Mobil (XOM)

Exxon Mobil is an oil supermajor commanding over $400 billion market cap.

While the broad market is deep in the red in 2022, Exxon shares have climbed 58% year to date.

It’s not hard to see why investors like the stock: the oil-producing giant gushes profits and cash flow in this commodity price environment.

Stay on top of the markets: Don’t miss the latest news and a steady flow of actionable ideas from Wall Street’s top firms. Sign up now for the MoneyWise Investing newsletter for free.

In the first six months of 2022, Exxon earned $23.3 billion in profits, a huge increase from the $7.4 billion in the year-ago period. Free cash flow totaled $27.7 billion for the first half, compared to $13.8 billion in the same period last year.

Solid financials allow the company to return cash to investors. Exxon pays quarterly dividends of 88 cents per share, translating to an annual yield of 3.5%.

Bank of America has a ‘buy’ rating on Exxon and a price target of $123. Since shares trade at around $100 right now, the price target implies a potential upside of 23%.

ConocoPhillips (COP)

ConocoPhillips is another big player in the energy sector. It had proved reserves of 6.1 billion barrels of oil equivalent and produced 1,567 thousand barrels of oil equivalent per day in 2021.

Just like Exxon, ConocoPhillips is firing on all cylinders thanks to strong energy prices.

In Q2 of 2022, the company’s average realized price was $88.57 per barrel of oil equivalent — a 77% increase from the $50.03 per barrel of oil equivalent in Q2 of 2021.

ConocoPhillips’ adjusted earnings came in at $5.1 billion for Q2, tripling the $1.7 billion it earned in the same period last year.

In August, the company announced a $5 billion increase in planned 2022 return of capital to $15 billion. Its latest dividend included an ordinary dividend of 46 cents per share and a variable return of cash payment of $1.40 per share.

ConocoPhillips shares have already surged 61% year to date and Bank of America sees further upside on the horizon. The bank has a ‘buy’ rating on the company and a price target of $140 — roughly 34% above where the stock sits today.

What to read next

‘The numbers just don’t work’: While rising mortgage rates have some homebuyers giving up, others think they’ve found a workaround

Retirees steer clear: These 15 US cities have the worst weather for living your best life in retirement

Here’s how much the average American 60-year-old holds in retirement savings — how does your nest egg compare?

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Advertisement

ProFootball Talk on NBC Sports

Bill Belichick skipped Robert Kraft’s wedding because Belichick had too much going on

The quarterback attended the wedding of the owner of his former team. The coach of the team was a no-show. One team won on Sunday in Cleveland, and the other team lost on Sunday in Pittsburgh. Patriots coach Bill Belichick, appearing on WEEI radio, explained on Monday morning that he talked to team owner Robert [more]

Gizmodo

World’s Second Richest Man Sells Jet So People on Twitter Won’t Track Him Anymore

Billionaires do seem to love the freedom of the skies, especially when they’re not crammed in with all the riff raff on any public flight. Though at the same time, the uber rich don’t enjoy other people criticizing them for routinely taking short jaunts on private jets while producing hundreds of tons of CO2 in the process.

The Daily Beast

Donald Trump Is an Antisemite and Republicans Are Totally Cool With It

Photo Illustration by Kelly Caminero/The Daily Beast/GettyDonald Trump is an antisemite.He regularly employs antisemitic tropes, essentializes Jews as a monolithic group, and entertains base stereotypes of Jews. He suggests that Jews are—or at least should be—more loyal to Israel than the United States. And yet, his defenders insist he can’t truly be antisemitic because his son-in-law is Jewish and his daughter converted to Judaism. Plus, he supports Israel.Trump himself has said he is “the leas

Reuters

Moscow mayor says draft complete, St Petersburg fires call-up chief

Moscow’s mayor said on Monday that military mobilisation in the Russian capital was now complete while St Petersburg sacked the official in charge there, the latest sign of problems with the unpopular and chaotic draft for the war in Ukraine. Moscow Mayor Sergei Sobyanin thanked Muscovites for their sense of patriotism and told departing soldiers in a blog post: “We will hope and pray that you return alive and healthy.” He said mustering points in the capital were closing on Monday afternoon and draft papers previously issued to men who had not yet reported for duty would no longer be valid.

Bloomberg

Forecast for US Recession Within Year Hits 100% in Blow to Biden

(Bloomberg) — A US recession is effectively certain in the next 12 months in new Bloomberg Economics model projections, a blow to President Joe Biden’s economic messaging ahead of the November midterms.Most Read from BloombergRussia Hits Ukrainian Capital Kyiv With Kamikaze DronesStocks Snap Back After Selloff With UK’s Reversal: Markets WrapThe Time to Buy the Dip Is Fast Approaching — for One CountryNATO-China Tension Over Ukraine Flares at Conference in IcelandThe latest recession probabilit

TechCrunch

Kanye West and Elon Musk provide a new exit path: The billionaire tantrum

This morning Kanye West announced he’s buying Parler, the annoyingly named so-called “free speech” platform that ignores the proper French pronunciation of its moniker in service of a poor pun. A spurned billionaire purchasing a social networking company because of perceived encroachments on their free speech rights (where none actually exist) seems… somehow familiar. Oh, that’s right: Elon Musk is doing basically the same thing, on a grander and more litigious scale.

Associated Press

Most say voting vital despite dour US outlook: AP-NORC poll

From his home in Collegeville, Pennsylvania, Graeme Dean says there’s plenty that’s disheartening about the state of the country and politics these days. At the center of one of this year’s most competitive U.S. Senate races, he’s on the receiving end of a constant barrage of vitriolic advertising that makes it easy to focus on what’s going wrong. A new poll from The Associated Press-NORC Center of Public Affairs Research finds 71% of registered voters think the very future of the U.S. is at stake when they vote this year.

MarketWatch

I’m 60, have ‘well into seven figures’ saved and my only debt is a $60K HELOC. Do I need a financial adviser to help, or can I navigate this myself?

My question is, do I need to retain a financial advisor for a 1% fee or can I navigate my retirement financially with an accountant only? Answer: Firstly, understand the differences in what an accountant can do for you, and what a financial adviser can. “An accountant could help with taxes, but is unlikely to address anything else,” says Julia Kramer, certified financial behavior specialist and certified public accountant at Signature Financial Planning.

Reuters

Planned Parenthood asks North Carolina court to let more health workers provide abortions

North Carolina abortion providers on Monday asked a state court to allow health professionals other than physicians to provide medication abortions, as clinics struggle to accommodate an influx of abortion patients from across the U.S. South. Planned Parenthood South Atlantic and SisterSong Women of Color Reproductive Justice Collective filed a motion seeking temporary relief from a state law that bans “advanced practice clinicians,” including nurse practitioners and physician assistants, from providing abortions. The motion was filed in a 2020 lawsuit challenging several abortion restrictions in North Carolina.

Reuters

U.S. Supreme Court gives boost to Domino’s in arbitration case

The U.S. Supreme Court on Monday gave a boost to Domino’s Pizza Inc’s bid to force delivery drivers to bring a wage lawsuit in private arbitration rather than in court in a case from California that could have major implications for gig economy companies. The justices threw out a lower court’s ruling that had let a group of drivers pursue a class action lawsuit seeking to recoup work-related expenses because their local deliveries represented the final step in the flow of goods over state lines. The justices ordered the San Francisco-based 9th U.S. Circuit Court of Appeals to reconsider the case in light of the Supreme Court’s unanimous ruling in June that Southwest Airlines Co could not force an overtime pay lawsuit by baggage handlers into arbitration because the workers routinely load cargo onto planes that cross state lines.

Ukrayinska Pravda

Ukrainian government works to make logistics more difficult for Iran as it helps Russia

ROMAN PETRENKO – MONDAY, 17 OCTOBER 2022, 11:02 Ukrainian authorities are working through diplomatic channels with neighbouring countries to stop all existing logistical corridors for Iran, Davyd Arakhamiia, the head of the Sluha Narodu [Servant of the People] faction, has said.

Sunflowers, war and oil: Why the price of margarine and butter spiked 32%

Previous article

What Type of Investor Are You?

Next article

You may also like

Comments

Leave a reply

Your email address will not be published. Required fields are marked *

More in Stock News