Alternative Investment Report

PCE Price Index up 0.3% in August: ‘we still are in a secular bull market’

S&P 500 is keeping flat on Friday after the Bureau of Economic Analysis said the Personal Consumption Expenditures Price Index eased to 6.2% in August.

Expert reacts to the PCE data

Versus the prior month, however, the Fed’s preferred inflation gauge was up 0.3% even though energy prices were down significantly.

Reacting to the economic news, Lizzie Evans (Managing Partner at Evans May Wealth) said the benchmark index could falter more in the near-term.

I think in the short term that we’re going to see further downsides. So, we’re looking at 3,500 and then if the market breaks though that, the next level we’re looking at is 3,200.

Earlier in September, consumer prices were reported up 8.3% in August – still near the forty-year high. SPX is already down more than 15% from its recent high.

Evans remains bullish for the long-term

Core PCE (excluding food and energy), climbed to 4.9% versus a 4.7% year-on-year increase expected. For the month, it was up 0.6%.

On CNBC’s “Squawk on the Street”, Evans said the U.S. 10-year Treasury will likely go up again to 4.0%. Still, she remains bullish for the long-term.

I think it’s going to get worse before it gets better. But we still are in a secular bull market. Secular bull markets last 15 to 20 years. This one started in 2013. So, I think it’s important to take that long-term approach.

She recommends capitalising on the 20% hit to “energy stocks” since June. A name she particularly likes within that space is Chevron Corporation (NYSE: CVX).

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