We had a confusing . Specifically, the Labor Department on Tuesday announced that the Consumer Price Index (CPI) surged 0.6% in April and 3.7% in the past 12 months. The , excluding food and energy, rose 0.4% in April and 2.8% in the past 12 months. Food prices rose 0.5% in April, while energy prices soared 5.6%. The core CPI came in a bit hotter than economists expected, but did not rise significantly. Shelter costs (owners’ equivalent rent) surged 0.6% in April after cooling for the past few months. This surge in shelter costs is being blamed for a lack of data collection during the federal government shutdown, which is skewing data.
Despite the confusing report, inflation has been moderating since the March CPI spike, so I suspect that investors will refocus on record earnings results. Fortunately, stocks are a great historical inflation hedge.
When there is uncertainty, an investor’s best defense remains a strong offense of fundamentally superior stocks. The encore to this stunning earnings announcement season is expected to be Nvidia (NVDA) and Micro Technology (MU), which in turn will mean that the will announce a staggering 20+% earnings growth in the first quarter. Since the order backlogs are growing for data center and AI-related stocks, the earnings in the upcoming quarter are now forecasted to be potentially even stronger.
President Trump’s trip to China, which commences on Thursday, is essentially a big Chamber of Commerce trip. He will be accompanied by key cabinet members, like Treasury Secretary Scott Bessent, as well as business leaders like Nvidia’s Jensen Huang, ’s Tim Cook, ’s Elon Musk, and ’s CEO. There is undoubtedly a new world order with the U.S. now dominating world energy markets and China’s military influence waning after its equipment proved to be ineffective in Iran. So, President Trump is expected to have a bit of swagger, strive to assert American dominance, and book business deals for many American companies.