• The latest jobs report is out and the economy added 263,000 new non-farm jobs in September
• Inflation continues to be a hot topic, with a very slight reduction expected ahead of official figures to be released next week
• Precious metals have been considered a hedge against inflation for thousands of years, and even today they can play a role in an investment portfolio
• Top weekly and monthly trades
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Major events that may affect your portfolio
The latest employment report from the Bureau of Labor Statistics just got out and that’s not bad at all. Private non-farm payrolls increased by 263,000 for the month of September, pushing the unemployment rate up from 3.8% last month to 3.7% this month.
That means the job market remains remarkably tight and surprisingly resilient to all the economic turbulence and swirling negative headlines. Large numbers were added in professional and business services (+46,000), manufacturing (+22,000) and construction (+19,000), while there were contractions in the financial sector (-8 000) and in transportation and warehousing (-8,000).
There was a 10 cent increase in hourly wages, bringing the average hourly rate to $32.46. As for the duration of work, it remains unchanged with 34.5 the norm for the fourth consecutive month. This brings wage growth to 5% over the past 12 months. In most years this would be considered quite high, but with inflation remaining stubbornly high at 8.3%, it is unlikely to cover rising costs for most households.
Those numbers so far don’t go in the direction the Fed predicts, with its projections showing an average unemployment rate of 3.8% for 2022. Obviously, we still have a long time to get there, but those numbers follow positive consumer confidence. last week’s figures, there is reason to be optimistic and cautious.
We hate to sound like a broken record, but inflation isn’t going anywhere. The September numbers are due out next week on October 13 and so far the forecast doesn’t look too rosy.
Most analysts agree that the United States has passed the peak of inflation, at least in part because of the supply chain problems that have arisen following the pandemic shutdowns. This is especially true given how forcefully Fed Chairman Jerome Powell has stated his goal of bringing the headline figure back into the 2-3% target range.
With inflation at 8.3% over the past 12 months, many will be eager to see how the numbers stack up for September. The Cleveland Fed operates what it calls a “Nowcast” which aims to predict what the rate of inflation will be based on movements in certain data such as energy prices.
So far, the Nowcast shows inflation of 0.3% for September, which would see the annual rate drop slightly to around 8.2%. That’s progress, but it won’t be enough to see the Fed make any changes to its expected interest rate swings.
Of course, these are just projections and we won’t know the final numbers until they’re announced next week. All we know is that inflation is not likely to lose its priority status for some time to come.
This week’s flagship theme from Q.ai
With inflation continuing to dominate the news cycle and markets remaining volatile, this is a challenging environment for investors.
One class of investment assets that often comes to the fore during times of high inflation are precious metals. Gold, silver and other metals have been used as investment assets and as a hedge against inflation for thousands of years, and even today they are used as a store of wealth.
There are many ways to invest in precious metals, but holding the metal itself is usually not the answer. It’s hard to buy considering you have to find a place that physically sells gold bars or coins and even if you manage to get your hands on things, you then have to keep them safe.
Proper storage in your home is expensive and insurance is either very difficult or impossible to arrange. You can pay to store it in a safe or storage facility, but that comes with its own hassles and costs.
To facilitate this process, we have created the Precious Metals Kit. This provides diversified exposure to the four main metals, gold, silver, platinum and palladium. The portfolio is exposed to these through the use of a range of different ETFs and we use AI to rebalance the portfolio weekly to find the optimal risk-adjusted return.
It offers investors diversified exposure to precious metals at a time when security is of paramount importance. So far this year, the strategy has worked well, with the precious metals kit returning 1.61% at the end of September. This is an excellent result given that the S&P 500 is down -24.77% over this period.
Best Business Ideas
Here are some of the best ideas our AI systems recommend for the week and month ahead.
Lululemon Athletica (LULU) – Sportswear brand Lululemon is one of our Best buys for next week with an A rating for quality value and a B rating for growth and low volatility. Earnings per share increased 3.51% over the past 12 months.
Nkarta (NKTX) – The biotechnology company is one of our Next Week’s Top Shorts with our AI giving them an F in our technical factor and D in quality value and low momentum volatility. The company has lost $98 million over the past 12 months.
Super Microcomputer (SMCI) – The diversified technology company is one of our Next month’s best buys with an A in our Low Momentum Volatility and Growth factors. Earnings per share increased by 25.81% over the last 12 months.
Agile Therapeutics (AGRX) – Another biotechnology company is one of our Next month’s best shorts with our AI giving them a D in quality value. Earnings per share are down -8.74% over the last 12 months.
Our AIs Next month’s top ETF trades is to invest in robotics, biotechnology and the consumer discretionary and short-term sector in the short-term bond market and the stock market as a whole. Best Buys are the ARK Autonomous Technology & Robotics ETF, the SPDR S&P Biotech ETF and the Vanguard Consumer Discretionary ETF. Top Shorts are the Vanguard Total Stock Market ETF and the Vanguard Short-Term Bond ETF.
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