Inflation Hitting Consumers & CHK added to S&P (John Mugarian's Dynamic Growth)

Inflation Hitting Consumers & CHK added to S&P

Well, well, it looks as if the cat is out of the bag. This morning the GDP numbers were revised upward, consumers are beginning to feel the pinch, and the economy is slowing.

The real danger is clear; cost-push inflation is a result of supply shocks such as high energy and commodity prices. An economy can slow, but as long as cost-push inflation is a factor, interest rates will continue to climb.

Its important for investors to know the difference between demand-pull and cost push inflation. The Federal Reserve is going to react negatively toward one versus the other, and the implications for the stock market are very different.

On the positive side, Chesapeake Energy (CHK) will be added to the S&P 500 on March 2nd.

Posted by John Mugarian on February 28, 2006 11:07 AM | Permalink

Disclaimer—This is for informational purposes only and is in no way a solicitation or an offer to sell securities. I am a registered investment advisor, but only provide solicited advice to clients of our firm in states where we are registered or where an exemption or exclusion from such registration exists. nothing on this website should be interpreted to state or imply that past results are any indication of future performance. carefully assess your own risk tolerance and goals before investing.

Comments (1)

Brad:

Here is an interesting study regarding the effect on share price as a result of being added to the S&P 500.
http://www.compustat.com/support/ri/event.pdf

Posted by Brad | March 2, 2006 5:54 PM

Posted on March 2, 2006 17:54

Inflation Hitting Consumers & CHK added to S&P

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