Bad-boy 'Inflation' is hot again

If you think inflation is gone, you're wrong!

Author

Atreya Sinha
February 24, 2023

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This week, the US Bureau of Labor Statistics released its latest inflation report, providing a deeper look into the current inflation levels across the country. Here are some of the key highlights of the report:

PCE Price Index

The Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred measure of how quickly prices are rising across the economy, rose 0.6% in January and 5.4% from the same month last year. On a "core" basis, which strips out volatile food and energy components, prices rose 0.6% for the month and 4.7% from the same month last year.

Consumer Spending

The report from the Commerce Department also showed that consumer spending rose 1.8% last month from December after falling slightly the previous month. This indicates that consumers are still spending, despite rising inflation.

Inflation Levels

The report suggests that inflation is not falling at the pace and extent investors have been hoping for, even as prices have stabilized from the peaks of the current inflation cycle.

Despite the slight uptick in inflation, the overall inflation rate has remained relatively stable. This is likely due to the continued support measures from the Federal Reserve, such as quantitative easing, which have kept inflation levels in check.

However, the current levels of inflation are still a cause for concern, as they may start to rise if economic conditions worsen. This could lead to higher interest rates and a slowdown in economic activity.

The stock market is a giant distraction from the business of investing. - John C. Bogle

A lot of companies reported earnings this week,

  • Block misses on earnings but beats on revenue, gross profit

  • Moderna misses on earnings amid rising costs as Covid shot demand falls

  • Alibaba shares rally 6% after massive earnings beat

  • Nvidia stock rises after slight beat driven by A.I. chips

  • Coinbase beats on revenue and earnings, but usage continues to decline

  • Home Depot misses revenue expectations for the first time since 2019

  • Walmart gives soft outlook for the year after posting strong holiday quarter

🌶️ Take

👀 Eye-popping

💫 Position of the Week - PDC Energy Inc (PDCE)

Last week we added this Energy bargain to our portfolio and this week, PDC Energy Inc reported their full year 2022 results, revealing higher revenues and improved profits for the year. Here are some of the key highlights from the report:

Revenues

PDC Energy Inc reported total revenues of $4.00 billion for the year, up from $2.38 billion in the same period a year ago. This was primarily due to higher production volumes and higher natural gas prices.

Earnings

The company reported net income of $1.78 billion for the year, up from $525 million a year ago. This was primarily due to higher production volumes, higher natural gas prices, and increased operating efficiency.

Reserves and Production

PDC Energy Inc had proven oil reserves of 270.02 MMbbls, with an average sales price of $93.80/bbl. Their proven gas reserves were 2892.258 Bcf, with an average sales price of $4.94/mcf. Their proven liquefied natural gas reserves were 347.703 MMbbls, with an average hedged sales price of $30.17/bbl. Total oil equivalent production was 85.038 MMboe, up from 71.333 MMboe in FY 2021. The average production cost per barrel of oil equivalent was $8.22, up from $6.26/Boe in FY 2021.

Overall, PDC Energy Inc's full year 2022 results show strong revenue growth and improved profitability. The company's strong reserves, production, and financial performance should provide investors with some confidence in the near-term.

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