Inflation Fears… War… Recession… Oh My!
This week’s news has made many investors nervous, focusing investor attention on our economy’s ongoing trouble spot… inflation.
Most of these concerns can be traced back to Russia’s war against Ukraine.
Since the war started, we’ve seen a growing list of government-imposed sanctions against Russia… along with a number of major U.S. companies — including McDonald’s (MCD), Coca-Cola (KO), Amazon Web Services (AMZN), and American Express (AXP), just to name a few — announcing plans to stop doing business with Russia for the foreseeable future.
On Tuesday, President Joe Biden announced a U.S. ban on Russian oil imports, upping pressure on Moscow in retaliation for its invasion of Ukraine. As a result, oil futures jumped up to $123.70 — the highest prices we’ve seen in 14 years.
And while this surge in oil prices has benefitted the oil and gas industry, it could be a big problem for just about every other industry. Any business or company that relies on shipping in some way is going to be looking at higher transportation costs in the coming months.
That spike in oil prices sent investors reeling.
The other group that will certainly feel that pain at the pump is the everyday consumer. (As I’m typing this, my mother just sent me a text message saying it cost her $70 to fill up her car… and she wasn’t even at empty.)
Which brings us to our other ongoing economic issue — soaring inflation.
Inflation Fears Are Dragging Down The Stock Market
As we’ve discussed in past issues, inflation was already rising at the fastest rate we’ve seen in a generation… and that was before Putin sent his armies into Ukraine. Previously, Fed Chair Jerome Powell had announced plans to institute an aggressive rate hike plan to help bring soaring inflation under control that was set to start in just a few weeks. However, it’s currently unknown how the new economic atmosphere — and a sagging stock market — will affect those plans.
Many analysts believe investors should brace themselves for more market volatility as the world sorts through the ongoing geopolitical uncertainty and how isolating Russia will impact the global economy. We likely haven’t seen the bottom yet.
Currently, the big three market indices are all in corrections, which means they’ve dropped more than 10% from their recent highs. The tech-heavy Nasdaq Composite has seen the worst of it, down more than 20%.
While we aren’t suffering from a recession — or even an “official” bear market (which occurs when the Dow Jones Industrial Average drops 20% from its recent highs) — it’s always smart to buy companies that would be a wonderful investment in any type of market environment.
Even during a bear market, we will still find income opportunities like this week’s recommendation — Johnson & Johnson (JNJ).
This healthcare company should be on anyone’s list for low-volatility stocks. It’s a high-quality, blue-chip company that holds steady whether times are tight or prosperous.
Additionally, the stock just recently flashed an Income Trader Volatility (ITV) “buy” signal.
How I’m Trading JNJ Stock
If you’re interested in this stock, you could buy shares of JNJ and hopefully catch some upside with this inflation-proof play.
But I found a better trade… One that allows my subscribers to collect 2% in income in just 37 days. That’s a respectable 20% annualized. And all without buying a single share of the stock.
How are we doing this at Income Trader? By using a high-income, short-term put option on JNJ.
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