Janet Yellen’s Inflation Talks Revealed This Summer’s Most Profitable Sectors

Today is the month’s third trading day, and so far the market has found a way to avoid “selling in May.”

I’m anticipating a correction to arrive very soon, but today’s Straight-Up Profits article will focus on two stocks that will continue to rally higher, despite this month’s “go away” mentality.

In fact, these two stocks are the foundation of my “best in breed” portfolio, and they will help you outperform the market for the rest of the entire year.

Even better, these are “set it and forget it” plays that you won’t have to monitor closely.

Of course, we’ll check in on them about once a month to make slight adjustments, but that’s it.

And to top it all off, these two stocks will hedge your portfolio and protect it from inflation.

Speaking of inflation, the US Secretary of the Treasury, Janet Yellen, announced this week that she is not concerned about it at all.

Of course she isn’t concerned.

Inflation has already crept its way into our everyday lives.

A piece of lumber is now three times more expensive than it was two years ago. A box of cereal, 75% more expensive than a year ago. Cars, 40% higher – and that doesn’t include the costs coming down the pipeline from higher steel prices.

America’s supreme financial policymaker sees no problem with any of this.

Which is why when it comes to our portfolio, a strong defense against rising prices is the best game plan for big profits.

Before we get to my inflation hedges, listen up – because there’s an event coming up that could change everything for your portfolio.

See, every month, institutional investors take their money out of certain sectors… and put them into new ones.

And when the big money shifts, new profitable opportunities amass.

This is exactly what my colleague, Andrew Keene, has been following for the last eight and a half months. And during that time, he’s locked in a 71%-win record with his trade recommendations.

The next big money shift is coming. And Andrew is revealing a brand-new trade rec based on that big money shift – one that could hand you 300% profits in a matter of months – right here.

After watching Andrew’s video, you can pad your portfolio even more with my top two inflation hedges…

CJ’s Best Inflation Hedge #1

Invesco DB Agriculture Fund (NYSE:DBA)

The DBA invests in a diversified basket of various agricultural natural resources, and as such can be a useful diversifying agent or inflation hedge. I always like to point out that you are holding a basket of futures contracts when you buy the DBA shares as there is some “slippage” in the pricing of the fund, but at a time like this it should be negligible.

Sahres are trading 15% higher for 2021 and more than 35% higher over the last 12 months. To put it into perspective, the Nasdaq 100 Index is trading only 55% higher in 2021. Like I say, not all your investments need to be sexy to make you money, DBA shares are as plain as they get, but just watch.

They will give you one facet of the inflation trade to your portfolio. The fundamental story couldn’t be stronger as we continue to see pricing growth in every segment of the market. For a while, inflation had been limited to packaging (size), but has now trickled up to the basic materials.

We’ve watched shares of DBA consolidate over the last two weeks as the bond market and the dollar have waivered, but the trend is picking back up as we watch DBA break towards $20 on increased volume.

That volume is important. I’ve been talking about a “buyer’s strike” in the market for the last month. The DBA shares are one of the few areas that my database is identifying as a buyer’s stronghold. These prices – both commodity and the exchange-traded note – are moving higher as a result.

CJ’s Best Inflation Hedge #2

VanEck Vectors Steel ETF (NYSE:SLX)

The increase in commodity prices is not limited to agriculture products.

We’re paying so much more for building materials and there’s a kicker. These prices are going through the roof while we’re heading towards one of the largest infrastructure spending initiatives in decades.

Steel prices have been on a rapid rise for the last six months, but the steel companies have almost doubled.

We’ve all heard about the affect of the semiconductor shortage on the auto industry, right?

Well, we would have a similar situation in the steel industry if it weren’t one thing… there are plenty of companies and materials to make it. Game on for the steel industry and even more reason that you need exposure to the sector in your portfolio as a commodity hedge.

The SLX shares are made up of the larger domestic and international steel manufacturers. The group will be busy over the next two years as the supply chain begins to rebuild while current demand is going even higher. It’s a fundamental bull’s dream, but that’s not what I base all my investment allocations on, you know that.

Instead, I’m keeping my eye on the technicals and sentiment of the steel industry. Both factors are combining to forecast another 75-100% growth cycle in the second half of 2021. Of course, there is a potential slipping spot.

The infrastructure spending bill – which is so much more than just infrastructure spending – is starting to show signs of slowing in congress as the politics surrounding the bill are getting heavy.

Bottom line, look for the republicans to flex some muscle to slim this bill to a true infrastructure bill and the steel companies are off to the races, again.

Analyst activity towards the steel companies have been muted. Sure, we’ve seen some upgrades, but the group is still lowballing it on their price expectations. Unlike the high valuations that have been tied to FAANG and other large cap sectors, the steel sector’s valuations remain low.

I’m expecting that to change as the technicals remain strong and the outlook continues to brighten. Watch for the analysts to start upgrading their price targets which is going to turn the heat up on this sector again.

This is one of your stronger commodity-based hedge sector plays with the SLX.

On Saturday, I’ll be back with two more of my best in breed sector plays to start rounding out the portfolio for additional growth.

From there, we’ll start adding best in breed stock positions to the portfolio and I’ll start tracking these suggestions as a real-time portfolio of investments as we move into the summer, allowing you to watch the best in breed system do its magic.

That’s all for now,


CJ

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