CPI Excludes Food. Have You Seen the DBA ETF?
2023.02.15 03:03
Maybe it’s just Valentine’s Day, so the food and commodities market sees a push to chocolates, flowers, and fine dining.
And maybe not. The came out with an unexpected rise…but goods remained softer. Services, on the other hand, rose.
However, the CPI excludes food and energy prices. We see no relief in many of the agricultural commodities in the Investor Invesco DB Agriculture Fund (NYSE:).
The underlying index includes , , , Kansas City wheat, , , , , , feeder cattle, and lean hogs, and most recently livestock.
Top 10 DBA Holdings
The investment seeks to track changes, whether positive or negative, in the level of the DBIQ Diversified Agriculture Index Excess Return™ (the “index”) over time, plus the interest income from the Fund’s holdings of primarily US Treasury securities and money market income less the Fund’s expenses.
If you want to track how the Fed controls real inflation, regardless of the inverted yield curve, the rise in long bond yields, or even the holding support.
Before we review the chart, our quant models have many commodities holdings. Particularly the Sector Conservative, Sector Moderate, and GEMS models hold metals and oil exploration.
Interestingly, we also hold SOXL or the 3 times leveraged Semiconductor bull (since January 11th).
Chips and commodities are where it’s at right now. That makes chips as valuable as, say, sugar (one of the largest holdings in DBA)
And speaking of sugar, the futures are holding recent highs. Another blast higher in sugar and more chaos could ensue, as we have written about many times.
The CPI number excludes food. However, to date, while food prices have declined from the peak in July 2022, food inflation sits at 10%. Food at home is 11.3%, and food away from home at 8.2%.
Circling back to the DBA chart. The price rose to clear all of the prior actions since October 2022. However, the 200-day moving average looms large as resistance with today’s high.
Also noteworthy is that DBA is now outperforming the benchmark according to our Leadership indicator.
Real Motion had a breakout and diversion to the upside as the momentum cleared over the 200-DMA and popped to new highs not seen since last September.
The diversion is that the momentum indicator cleared the 200-DMA while the price has yet to confirm. Something to watch out for.
With the four indices still rangebound, these continuing bullish trends in the most essential thing on the planet-FOOD-should keep those focusing on A) disinflation and B) A fed pivot a bit quieter.
ETF Summary
- S&P 500 (NYSE:): 420 resistance with 390-400 support.
- iShares Russell 2000 ETF (NYSE:): 190 pivotal support and 202 major resistance.
- Dow Jones Industrial Average ETF Trust (NYSE:): 343.50 resistance 338 support.
- Invesco QQQ Trust (NASDAQ:): Nice comeback-still 2 inside weeks working, so watch 311 as a good point to clear or fail from.
- S&P Regional Banking ETF (NYSE:): 65.00 resistance 61 support.
- VanEck Semiconductor ETF (NASDAQ:): 248 cleared with the chips rout-254.60 last week’s high.
- iShares Transportation Average ETF (NYSE:): The 23-month MA is 244-now resistance 228 support.
- iShares Biotechnology ETF (NASDAQ:): Sideways action 130-139 range.
- S&P Retail ETF (NYSE:): 78.00, the 23-month MA resistance, and nearest support 68.00.
