Powers: Pepsi is a dividend king, trading at five-year lows with a 4.3% yield
Matt Powers, Managing Partner at Powers Advisory Group, says markets were unimpressed by CPI and China news, sees long-term value in Pepsi, and stresses it remains a stock picker's market.
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Yahoo
an hour ago
- Yahoo
Bank of England ‘unlikely' to cut interest rates as inflation pressure grows
The Bank of England is predicted to keep UK interest rates at 4.25% on Thursday amid rising food inflation and the threat of surging oil prices pushing up the cost of living. Most economists think the Bank of England's Monetary Policy Committee (MPC) will opt to keep rates on hold when it meets on Thursday. The MPC has voted to cut rates at every other meeting since it started easing borrowing costs last August, from a peak of 5.25%. This has been possible while the rate of UK inflation has been steadily falling from the highs reached in 2023, at the peak of the cost-of-living crisis. Interest rates are used as a tool to put a lid on unruly inflation, in line with the Bank's task of keeping the rate of Consumer Prices Index (CPI) at 2%. However, rising food prices have been putting pressure on overall inflation recently, with the latest data from the Office for National Statistics (ONS) showing food and non-alcoholic drink prices rose by 4.4% in the year to May. This was the highest level in more than a year, with items like ice cream, coffee, cheese and meat spiking last month. Chocolate prices soared by nearly 18% annually, a record jump for the confectionery. The overall CPI rate came in at 3.4% in May, slightly higher than the 3.3% rate most economists had been expecting. Monica George Michail, associate economist for the National Institute of Economic and Social Research (Niesr) said the institute was forecasting inflation to remain above 3% for the rest of the year amid 'persistent wage growth and the inflationary effects from higher Government spending'. 'Additionally, the current tensions in the Middle East are causing greater economic uncertainty,' she said. 'We therefore expect the Bank of England to keep rates on hold this Thursday and implement just one further cut this year'. Sandra Horsfield, an economist for Investec, said the Bank of England is likely to be encouraged by services inflation dropping to 4.7% in May, from 5.4% in April. This could indicate that higher employer national insurance contributions, which rose in April, have not been passed onto consumers to the extent that policymakers had feared, she said. But Ms Horsfield said 'other uncertainties remain, not least with respect to US tariffs and the indirect impact this will have on UK firms'. 'The risk to energy prices has clearly intensified and moved up the agenda given developments in the Middle East,' she said. 'It seems unlikely the MPC will want to change policy rates this week. 'But we think Wednesday's data keep another rate cut at the subsequent MPC meeting in August firmly on the table.'
Yahoo
2 hours ago
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Falling Rents Could Be Good News for Inflation
Rental prices fell for the 22nd straight month in May, growing at a slower rate than overall inflation and housing costs, a report showed. Rent was 19.6% higher than pre-pandemic 2019 levels, while inflation climbed a bit more than 25% over the same period and housing prices have gained over 50% in that time. Because shelter costs are a major component of the Consumer Price Index, which measures inflation, economists said that lower rents could help drive coming CPI reports one major expense that isn't being overtaken by inflation: rent. Asking rents fell for the 22nd straight month in May, down 1.7% year-over-year, saving renters $29 last month. Rents are still higher than pre-pandemic levels, but rent increases over the past six years have been slower than both inflation and home-price growth, a report from showed. In May, the median rent was $1,705, up 19.6% from May 2019. Over the same period, inflation has driven overall prices higher by 25.6%, growing at a much faster pace than rents. This is also true for home prices, because the median price per square foot of listings has shot up by more than 50% since 2019. 'While this is an encouraging sign, for most major U.S. metros rents are still considerably higher than before the start of the pandemic, and despite 22 consecutive months of year-over-year declines, the U.S. median rent was just $54 less than the peak seen in August 2022," Danielle Hale, chief economist at said. Lower rents could help improve inflation reports in the future. That's because shelter costs, including rents, are a component of the Consumer Price Index (CPI) inflation measurement. CPI ticked up slightly in May to 2.4%, a slower increase in prices than economists expected, but rising housing costs were primarily responsible for the increase. "Falling median asking rents are an encouraging sign that relief is on the way for shelter inflation, which has been one of the largest contributors to elevated consumer prices," Hale said. "Because shelter costs tend to lag behind real-time market trends, the sustained slowdown in rent growth is likely to show up in the Consumer Price Index in the months ahead, helping to ease overall inflation pressure." Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Hill
2 hours ago
- The Hill
Housing starts drop to lowest level since pandemic
The number of housing units that started construction in May fell to the lowest level since 2020, as the sector battles headwinds blown by high interest rates. Housing construction dropped 9.8 percent from April to May, the Commerce Department reported Wednesday. If construction continued at that pace through the year, there would be 1.25 million units built in 2025, down from a pace of 1.39 million reached in April. The number is down 4.6 percent from a year ago, when the pace was 1.4 million units. 'Housing starts plunged in May as builders step back in 2025 amidst fading demand and rising costs,' Nationwide economist Ben Ayers wrote in a commentary. New building permits were down 2 percent from April. Housing completions were up 5.4 percent on the month but were still down 2.2 percent on the year. The housing sector was jolted by interest rate hikes delivered by the Federal Reserve in response to soaring post-pandemic inflation. While interest rate hikes combat inflation by slowing the pace of borrowing, they can also bolster the price of housing directly by making financing more expensive. Most housing is paid for with debt. Inflation as measured by the consumer price index (CPI) has fallen to an annual increase of 2.4 percent, but shelter inflation is still at 3.9 percent. Housing inflation has lagged headline inflation throughout the post-pandemic period. Rates on the 30-year fixed rate mortgage were at 6.84 percent this week, still way above pre-pandemic rates around 3.5 percent. Meanwhile, housing inventories are at their highest level since November 2019. The U.S. has a huge shortage of affordable housing. The National Association of Home Builders put the shortage at 1.5 million units in 2021 while government mortgage backer Freddie Mac put it at 3.8 million units and the National Association of Realtors estimated it at 5.5 million units. Analysts noted Wednesday that the May drop in starts was concentrated in multifamily construction, which does not bode well for the affordable housing shortage. 'A sharp downward shift in multifamily construction drove the decline in May,' Ben Ayers wrote.
