|Dow||+61.81 to 17,113.54|
|S&P 500||+9.90 to 1,983.53|
|Nasdaq||+31.32 to 4,456.02|
|10-YR Yield||-.008 to 2.466%
|Gold||-$6.90 to $1,307
|Crude Oil||-$0.17 to $104.42|
Don’t look now … but the price of gasoline is EXPLODING. Gas prices surged 3.3 percent last month alone, according to the just-released Consumer Price Index. That was the single-biggest rise since June 2013, and more than four times the increase in May.
Overall inflation is now running at 2.1 percent, the most in 20 months. And that’s just the official CPI reading, which you and I both know understates the real inflation we’re experiencing in our lives every day.
The Federal Reserve’s apologists will say, “Yeah, but crude oil prices fell in early July. So these numbers will come right back down.”
But the huge flare-ups in the Ukraine, in the Middle East and elsewhere are already working to reverse that move. Crude oil rose right back to $105 a barrel earlier today, close to its highest level since last September.
Gasoline futures prices are also well above the lows they set in late 2013 — some 16 percent higher, in fact. It won’t take much at all to push gas prices from the current national average of around $3.67 per gallon to $4 and beyond.
|Consumer prices, including those at the pump, are rising. And given the many tension points around the globe, the increases could continue and even intensify.|
Now, there are lots of ways you can fight back against rising gas and energy prices. Drive a more fuel-efficient car. Carpool with co-workers. Make sure your tires are properly inflated. Consider diesel or hybrid cars rather than traditional gasoline models.
But as an investor, there’s a much better way to go. Buy shares of the companies that are making money hand over fist from the energy boom!
“There are lots of ways you can fight back against rising gas and energy prices.”
I’m not just talking about the big energy producers, the kinds of names that have driven the value of the Energy Select Sector SPDR Fund (XLE) to all-time highs above $100 a share. I’m talking about smaller- and mid-capitalization stocks that are raking in the dough from producing, transporting, storing, and processing oil, natural gas, and liquids right here in the U.S.
We’re in the midst of an unprecedented boom in domestic energy here, folks, the kind that is literally creating fortunes. Heck, one company that’s helping producers ship oil to market by rail is up a whopping 106 percent since I first recommended it to my Safe Money Report subscribers. Another energy transportation firm has generated total returns of 34 percent in just eight months.
I’m very excited about those kinds of returns, and I am re-doubling my efforts to bring you details on these kinds of winning energy investments. So do stay tuned. Because if I’m right, the kind of gasoline and energy inflation we’ve seen so far in the CPI is just the start.
What about you? What do you think is driving the increase in gasoline and oil prices? What investment strategies make the most sense to you in this environment? Share your insights on ways to profit from the domestic energy boom at the Money and Markets comments section here.
|OUR READERS SPEAK|
Many more of you weighed in on the crises in the Ukraine and Middle East in the wake of yesterday’s column. So let’s get right to your comments.
Reader Ziggy discussed some of the economic pre-cursors to today’s battle of wills with Vladimir Putin. His remarks: “Russia has historically been striving to be part of Europe culturally and economically. Why is the Obama administration so opposed to Russian economic involvement? Are the nations buying gas from Russia not able on their own to negotiate the best possible price for gas? If the Ukrainians can’t pay for their gas, does the U.S. need to start another cold war?”
On the other hand, Reader William M. noted that the U.S. is almost required to stand behind the Ukrainians because of past agreements. He said: “The United States promised to give protection and support to the Ukraine in exchange for their nuclear arsenal and essentially their ability to protect themselves. What kind of ally does the complete opposite of what they’ve given their word to do?”
Reader Dorothy B. also argued that we have an obligation to stand up to people like Putin. Her comments: “Your reader who thinks Russia is doing exactly what we the United States has always done by helping countries with aggressive invaders of their countries stating Lincoln, etc. should stop and really think about his comments.
“We are not invading countries to take over to dictate. If the greatest country in the world does not help others, who is going to do it? Do you want another Hitler, Stalin, etc. ruling the world? How soon we forget World War II, Sept 11, etc.”
Finally, Reader Richard J. made a handful of more historical and philosophical points about the current conflicts. His take?
“Ethnic/religious conflicts/wars have been waged on this planet for thousands of years. Most are because of ignorance on the part of the general population.
“I believe that the majority of people on this planet want to live in peace with their brothers and sisters no matter what their political or religious beliefs may be. However, as witnessed throughout all history, it only takes a forceful leader with a ‘tuned’ message, to lead the sheep to slaughter. Only God can give us lasting peace, and until we ALL begin asking for this gift, wars and strife will continue unabated.”
As the current conflicts unfold, I will continue to do my best to keep you updated on all the latest news — and what it means for you. In the meantime, please do continue sharing your perspectives in the comment section
|OTHER DEVELOPMENTS OF THE DAY|
Worries about jetliner safety in Israel prompted Delta Air Lines (DAL, Weiss Ratings: B+) to divert a Tel Aviv-bound plane to Paris. Delta and competitors like American Airlines Group (AAL, Weiss Ratings: D+) are reportedly concerned about rocket attacks emanating from Gaza, especially in light of the loss of Malaysia Airlines Flight 17.
Speaking of the conflict, the Palestinian death toll topped 600 amid ongoing street fighting and rocket fire. Israel’s death toll hit 30, with cease-fire talks in Egypt proving largely futile so far.
The Obamacare health insurance program has sparked intense debate. Now, it’s facing a serious legal challenge as well. A federal appeals court ruled today that the federal government can’t subsidize insurance for Americans who sign up for coverage through the federal exchange. It can only do so for customers who signed up through one of the 16 state exchanges, or one established by the District of Columbia.
Since the appeals process could go all the way to the Supreme Court, nothing will change immediately. But if those subsidies are ultimately deemed unlawful, the entire program could collapse because insurance coverage costs would soar and participation would plunge.
The corporate earnings parade continues unabated, with several household names and Dow members weighing in today. McDonald’s (MCD, Weiss Ratings: B) reported a 1 percent decline in profit to $1.39 billion, or $1.40 per share, as well as a disappointing decline of 1.5 percent in comparable store sales in the U.S.
DuPont (DD, Weiss Ratings: B+) basically delivered an in-line quarter on the earnings front, but a 1.4 percent decline in sales to $9.7 billion. That missed forecasts for $10 billion.
Reminder: You can let me know what you think by putting your comments here.
Until next time,