Author: Peter Kurata
Covestor Model: CANSLIM
Disclosure: Long SLV, GLD
March continued to head fake and fool investors.
Inflation has been most obvious at the gap pumps, and while we consumers complain about $4/gallon gas, the government simply turns its head the other way, as energy is not included in their official inflation report. Groceries are also missing, but will soon be our next inflation gripe. Wal-Mart (NYSE: WMT) U.S. CEO Bill Simon said during a meeting with USA TODAY’s editorial board. “We’re seeing cost increases starting to come through at a pretty rapid rate.” He warned that Americans should expect “serious” inflation in coming months.
Increased prices for consumer goods are just ahead, despite low interest rates. Some companies are camouflaging price increases by selling smaller versions of their products: “greener” packages for the environment, more “portable” little carry bags for the takeout lifestyle, or “healthier” fewer calories labeling. It is clear that our elected officials are further adding to the problem, with a FY2012 budget which will spend $3 for every $2 of tax revenue.
The iShares Silver Trust (NYSE: SLV) and SPDR GOLD Trust (NYSE: GLD) ETFs continue to be my preferred inflation plays but are extended from last month’s mentioned buy points.
Keep watch on Amazon.com (NASDAQ: AMZN). Known primarily as a retailer play, it has set another stake in the ground this month as a bona fide in the cloud computing sector. The Amazon Cloud Player is a music service is an Apple iTunes competitor, but runs completely on the web. The big difference is that your music will be available on any internet connected device. So in addition to playing in at home or your iPod, your music will be available on any Android phone, computer, and in the near future, TVs.
In addition to music, your Amazon cloud account can hold pictures or documents; think of it as a virtual thumb drive. Amazon also has business cloud service called AWS (Amazon web Services). The same infrastructure used to run amazon.com can be rented out to businesses. AWS has quietly grown to hundreds of thousands of customers including Netflix, and generates significant revenue for the company. Technically, Amazon stock also looks good at this stage.
Sources:
“Wal-Mart CEO Bill Simon expects inflation“ Jayne O’Donnell, USA Today, March 30, 2011
