Hey There Income Hunters,
Food and shelter.
Gotta have them.
As we frequently discuss the components that impact inflation, those are two costs I pay attention to the most.
Combined, they represent almost 50% of the CPI basket calculation for the official inflation target.
To get a real handle on food costs and their potential for affecting prices, believe it or not. fertilizer (believe it or not) has the greatest impact.
Can you guess the year-over-year rise in fertilizer costs?
How about 176%!
And this isn’t a spike. The price has been rising steadily since Covid began.
Meanwhile, when we look at the housing picture, the general consensus is focused on a bubble in the housing market that will burst and prices will collapse.
No, no, no. It is, in fact, the opposite.
Today I’ll show you the supporting data and the commodity to buy right now for the next move higher.
The Scary Signpost for Further Food Price Hikes
The chart below illustrates how corn prices (black line) will need to be raised and passed though due to soaring fertilizer costs (blue line).
Food costs represent more than 15% of the CPI basket and supply restraints will not let up any time soon, so food costs won’t see much relief in 2022.
Let’s check housing …
Single Family Homes Inventory
Existing Home Sales (EHS): Single family inventory (months supply):
An all-time low in supply when rates are also at all-time lows? That is a recipe for much higher prices.
Let’s look at the demand side:
The graph below shows the population of millennials at each age group.
Notice that for the next few years, the largest age groups are heading towards the average age for first time home buyers …
These are very strong supply and demand arguments for higher home prices for the next couple of years.
These are not arguments you are going to hear from the media or the Fed.
I think the way to play it is through copper and silver because between housing, electric vehicles and green energy they will both be in huge demand for years to come as well.
US Copper Index Fund (Ticker: CPER)
Copper is in a good position on the charts for a low risk/high reward trade.
I like the fact that we have seen heavy selling on this recent down trade. I see a nice rally coming in copper …
On Friday, I purchased $CPER Dec. 17 28/29 CS for $.30
Bring It Home
General consensus continues to focus on the glass half-full meaning waiting for an external shock that would hurt the market.
I just don’t see it and we may begin to see stronger economic numbers in the weeks ahead.
Have a great weekend and as always…
Live and Trade With Passion My Friends,