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Fed’s preferred inflation gauge eased further in November

By:
on Dec 23, 2022
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  • Core personal consumption expenditures price index was up 0.2% in Nov.
  • Pro recommends that equity investors stick to staples and healthcare sector.
  • The benchmark S&P 500 index is currently down just over 20% for the year.

S&P 500 opened down again on Friday even after the U.S. Bureau of Economic Analysis said the core personal consumption expenditures price index continued to relax in November.

What does it mean for the stock market?

Versus the previous month, the Fed’s preferred inflation gauge was up 0.2% – in line with the economists’ forecast.

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Still, Michael Landsberg – the Chief Investment Officer at Landsberg Bennett Private Wealth Management recommends caution on the equities market at least through the first half of the coming year.

I think there’s some consumer areas that super high credit debt, super low cash balances – that’s a problem going forward. So, I think we’re cautious probably for the next six months.

On a year-over-year basis, the core PCE price index was up 4.7%; a leg down from 5.0% in October. For the year, the benchmark index is down just over 20% at writing.

Landsberg finds two sectors worth investing

To be clear, Landsberg is not suggesting that you close shop and shut the drapes entirely on the equities market. On CNBC’s “Squawk Box”, he actually greenlit investing in the defensive names, but recommended being selective even within those.

I think there are some spots in the market you could be selective. Staples and Healthcare, you can selectively jump in there and look for spots that’ll hold up, where consumer is not going to be stretched either.

A day earlier, billionaire investor David Tepper also said that he was “leaning short” on stocks and was holding small positions only as Invezz reported here.

Also on Friday, personal spending was reported up 0.1% for the month.