The Shockwave Issue

The Personal Consumption Expenditures (PCE) Index is the preferred inflation metric for the Federal Reserve. This month’s report came out during Good Friday when the markets are closed. Within hours, the hawks who favor higher rates and the doves who favor lower rates all claimed the report vindicated their view. We’ll elaborate. Shockwave Medical gets approached by J&J and DKI subscribers make huge returns. Investor, analyst, and writer, Enrique Abeyta, contributes a guest "Thing” with a technical indicator that’s been predictive 100% of the time. Nvidia (NASDAQ: NVDA) takes a loss – sort of. Finally, consumer confidence looks ok for now, but future expectations are signaling a recession. If that’s confusing, don’t worry – we’ll explain.

This week, we’ll address the following topics:

• The PCE is still too high, but in-line with expectations. Fed doves and asset gatherers resume begging for rate decreases.
• Shockwave Medical (NASDAQ: SWAV) gets takeover offer. DKI subscribers make 70% in under four months. What happens next?
• Enrique Abeyta explains a predictable technical indicator which only happens once or twice a decade. That’s right – it’s a guest "Thing”.
• Nvidia () suffers its first loss of the year.
• Consumer confidence doesn’t surprise, but does offer a warning.

• Ready for a new week of shocking information? Let’s dive in:

• The PCE is as Expected:

• The Personal Consumption Expenditures (PCE) price index is the Fed’s preferred measure of inflation. February’s PCE was up 2.5% for the past year and 0.3% for the month. The yearly number was in line with expectations. The monthly was just below the 0.4% expected. The difference is rounding. The Core PCE, which excludes food and energy was up 2.8% for the year and 0.3% for the month. Both of those were in-line with expectations. Consumer spending, which has been weak in recent months was up 0.8% which was above the 0.5% expected. Part of that increase in spending is due to inflation and part is due to more purchasing. In a shift from recent trends, pricing on goods increased by more than that for services.

Asset gatherers took this month as proof that the Fed should lower rates. Actual results look pretty flat to me.

DKI Takeaway:  It’s 11am on Friday as I write this, and I’ve already read multiple articles about how the "lower” PCE means the Fed should lower interest rates in June. The PCE was up by 0.1% and the Core PCE was down by 0.1%; both within a reasonable margin of error. The 0.3% monthly increase annualizes to 3.7%. It’s possible that another few months of CPI and PCE data could influence the Fed to lower rates at the June meeting. However, this same PCE report is being cited by the hawks (people who prefer higher interest rates) as proof they’re right while doves (who favor lower rates) claim it validates their beliefs. Current Fed Chairman, Jerome Powell, offered public comments that will be interpreted by both sides as favorable to their preferred path. My view is we’re seeing sticky inflation, and the Fed should be very careful about lowering interest rates too early. That’s the mistake made by former Fed Chairman, Arthur Burns in the 1970s.

1. Shockwave Medical () Gets Approached Again:

DKI recommended Shockwave Medical to subscribers in December at $190. ...

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