For the past year or so, inflation has affected just about every aspect of our economy. From the red-hot housing market to the cost of gas, higher prices and a weakened dollar have put a strain on just about every business sector.

With over $5 trillion pumped into the U.S. economy over the past two years amidst supply-confounding shutdowns – plus more recent problems like the war in Ukraine – price surges have become anything but predictable.

It might be too early to breathe a sigh of relief today, but…

New data indicates that inflation may have found its peak at last quarter’s tail end. The Wall Street Journal reports:

“A slide in all manner of raw-materials prices – corn, wheat, copper, and more – is stirring hopes that a significant source of inflationary pressure might be starting to ease.

“Natural-gas prices shot up more than 60% before falling back to close the quarter 3.9% lower. U.S. crude slipped from highs above $120 a barrel to end around $106. Wheat, corn and soybeans all wound up cheaper than they were at the end of March. Cotton unraveled, losing more than a third of its price since early May. Benchmark prices for building materials copper and lumber dropped 22% and 31%, respectively, while a basket of industrial metals that trade in London had its worst quarter since the 2008 financial crisis.

“Many raw materials remain historically high-priced, to be sure. And there are matters of supply and demand behind the declines, from a fire at a Texas gas-export terminal to better crop-growing weather. Yet some investors are starting to view the reversals as a sign that the Federal Reserve’s efforts to slow the economy are reducing demand.”

Commodities are at the fundamental core of our global economy. Since so many end-goal products rely on raw materials, a price drop in these markets is a great indication that inflation in other areas may soon subside.

For instance, the lumber market went crazy during Covid. Builders were paying high premiums for the materials used to make houses. Therefore, as their costs increased, home prices, rents, and remodeling costs hit record highs as well.  

If this pricing trend continues, we may be able to avoid a recession after all.

Are we in the clear just yet? Probably not.

But is this drop in commodities a great sign? Absolutely.

More Non-REIT News to Know About 

Aside from a cooling in commodities prices, you soon may see a huge sale on retail items – if you know where to look.

Remember how I reported last month on the decline in discretionary spending at department stores like Target (TGT) and Walmart (WMT)? Well, that’s led to an overstocking issue. Major retailers across the country are now saddled with an excess of inventory.

Everything from clothes to computers is now piling up in warehouses. And they need to be offloaded to make room for new products.

That’s why liquidation companies are selling “stuff” for pennies on the dollar. Take Home Buys, an off-price reseller out of Columbus Ohio. It’s selling name-brand kitchen and home appliances at 40% off manufacturer’s suggested retail prices.

“Before Covid, we wouldn’t have had washers and dryers in our stores,” said Brady Churches, CEO of Home Buys. “The market for those items is normally tight, and there isn’t a lot of excess.”

Churches said there’s a greater amount of excess stock now than at any time during the past two decades. He’s been piling up outdoor furniture and clothes – particularly sweaters and other winter garments that missed the cold-weather shopping season. “The secondary market is swimming in apparel,” he added.

Basically then, if you’ve been looking for that next washer, television, or wardrobe addition, now’s the time to buy. Shopping off-price retailers like TJ Maxx (TJX), Overstock.com (OSTK), Ross (ROST), or Home Goods could yield some significant real retail wins. Happy hunting!

The World According to REITs 

As long as we’re on the subject of warehouses…

I just got some interesting data on one of the country’s most renowned real estate investment trusts (REITs). Plymouth Industrial REIT (PLYM), purveyor of multi-tenant industrial properties, warehouses, and distribution centers, shed a ton of short interest in June.

As of mid-June, there was short interest totaling 624,500 shares, a 20.6% decline from May 31’s 786,600 shares. Based on an average trading volume of 346,500 shares, the days-to-cover ratio is presently 1.8.

This means big banks and hedge fund naysayers seem to be backing off. Plymouth may finally have found its floor and could even see upward performance as Q2 earnings are announced.

Based on its long history in the industry and its stellar performance during the Covid era, I believe this Boston-based blue-chip is set up for continued success in the industrial sector. Its growth and acquisitions are strong, and its fundamentals are sound. 

For those betting against Plymouth, it might be time to reassess.

Author’s Note: If you do determine this stock is right for you, make sure to purchase it at a smart entry point. Even the best of companies can burn you badly by buying in at inflated prices.

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