Fed Chief Jerome Powell testified before the House Financial Services Committee Wednesday morning, telling lawmakers that interest rate cuts are likely “at some point” this year. But Powell also reiterated the Fed’s cautious, data-dependent stance as the central bank assesses how the inflation picture evolves in the coming months.
The committee “does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably” downward to the Fed’s ideal target of 2%, Powell stated in his remarks.
The Fed Chairman will continue his testimony in front of the Senate Banking Committee on Thursday.
The next FOMC meeting is slated for two weeks from now, and markets are pricing in just a 3% chance of a rate cut. While Powell has signaled that the worst of inflation is likely behind us, the path for rate cuts has been steadily pushed back amid positive economic data and a resilient U.S. consumer.
Rate Cuts Delayed as Inflation Lingers
The latest Consumer Price Index (CPI) report showed that overall CPI rose 3.1% year-over-year, above expectations for a decline to 3.0%. Excluding food and energy components, core CPI also came in hot with a 3.9% annual increase.
We’ll get an update on the CPI next week with the release of the February figures.
Transportation is one of the components within the CPI that has remained sticky. Surging auto insurance rates are a big reason why that has been the case. We can see below that rates are up 20.6% over the last year, the largest 1-year move in prices dating back to 1976:
Furthermore, motor vehicle insurance prices have skyrocketed nearly 85% during the last decade, far above the 31% increase in the overall CPI. For the commuters out there, you’ve probably noticed more accidents over the years due to higher levels of traffic, which in turn raises costs to repair damaged vehicles. Another reason for the spike in car insurance rates was the COVID-19 effect, which altered the supply chain and increased replacement costs (resulting in a used car bubble).
Higher Car Insurance Rates Boost Providers
The biggest beneficiaries of rising insurance prices have undoubtedly been car insurance companies. The Zacks Insurance – Property and Casualty industry group contains many car insurance companies that have outperformed the market. This group currently ranks in the top 17% out of approximately 250 industries and has shown relative strength to start the year:
Targeting individual stocks contained within the top industry groups provides a constant ‘tailwind’ to our investing success. Also note the favorable characteristics for this industry below:
One leading company within this group is The Progressive Corporation (PGR - Free Report) . Over the last decade, PGR stock has widely outperformed the S&P 500 with a 923% gain. The trend has continued this year, with PGR rewarding investors with a 22% return year-to-date.
A Zacks Rank #1 (Strong Buy), Progressive provides personal and commercial property and casualty insurance along with other specialty insurance services primarily in the United States. The company sells its products through independent insurance agencies as well as directly to the consumer.
The insurance provider continues to gain on higher premiums given its compelling product portfolio, leadership position and strength in its vehicle and property businesses. Revenues have steadily increased over the years, with current estimates calling for growth of 15.65% to $71.4 billion this year.
Analysts covering PGR are expecting solid earnings numbers and have bumped up EPS estimates by 10.27% in the past 60 days. The 2024 Zacks Consensus Estimate stands at $9.13/share, reflecting a growth rate of nearly 50% relative to last year.
Keep an eye on this insurance giant as the company looks primed to continue its outperformance.
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We're not kidding.
Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.
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Fed Chief Jerome Powell testified before the House Financial Services Committee Wednesday morning, telling lawmakers that interest rate cuts are likely “at some point” this year. But Powell also reiterated the Fed’s cautious, data-dependent stance as the central bank assesses how the inflation picture evolves in the coming months.
The committee “does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably” downward to the Fed’s ideal target of 2%, Powell stated in his remarks.
The Fed Chairman will continue his testimony in front of the Senate Banking Committee on Thursday.
The next FOMC meeting is slated for two weeks from now, and markets are pricing in just a 3% chance of a rate cut. While Powell has signaled that the worst of inflation is likely behind us, the path for rate cuts has been steadily pushed back amid positive economic data and a resilient U.S. consumer.
Rate Cuts Delayed as Inflation Lingers
The latest Consumer Price Index (CPI) report showed that overall CPI rose 3.1% year-over-year, above expectations for a decline to 3.0%. Excluding food and energy components, core CPI also came in hot with a 3.9% annual increase.
We’ll get an update on the CPI next week with the release of the February figures.
Transportation is one of the components within the CPI that has remained sticky. Surging auto insurance rates are a big reason why that has been the case. We can see below that rates are up 20.6% over the last year, the largest 1-year move in prices dating back to 1976:
Furthermore, motor vehicle insurance prices have skyrocketed nearly 85% during the last decade, far above the 31% increase in the overall CPI. For the commuters out there, you’ve probably noticed more accidents over the years due to higher levels of traffic, which in turn raises costs to repair damaged vehicles. Another reason for the spike in car insurance rates was the COVID-19 effect, which altered the supply chain and increased replacement costs (resulting in a used car bubble).
Higher Car Insurance Rates Boost Providers
The biggest beneficiaries of rising insurance prices have undoubtedly been car insurance companies. The Zacks Insurance – Property and Casualty industry group contains many car insurance companies that have outperformed the market. This group currently ranks in the top 17% out of approximately 250 industries and has shown relative strength to start the year:
Targeting individual stocks contained within the top industry groups provides a constant ‘tailwind’ to our investing success. Also note the favorable characteristics for this industry below:
One leading company within this group is The Progressive Corporation (PGR - Free Report) . Over the last decade, PGR stock has widely outperformed the S&P 500 with a 923% gain. The trend has continued this year, with PGR rewarding investors with a 22% return year-to-date.
A Zacks Rank #1 (Strong Buy), Progressive provides personal and commercial property and casualty insurance along with other specialty insurance services primarily in the United States. The company sells its products through independent insurance agencies as well as directly to the consumer.
The insurance provider continues to gain on higher premiums given its compelling product portfolio, leadership position and strength in its vehicle and property businesses. Revenues have steadily increased over the years, with current estimates calling for growth of 15.65% to $71.4 billion this year.
Analysts covering PGR are expecting solid earnings numbers and have bumped up EPS estimates by 10.27% in the past 60 days. The 2024 Zacks Consensus Estimate stands at $9.13/share, reflecting a growth rate of nearly 50% relative to last year.
Keep an eye on this insurance giant as the company looks primed to continue its outperformance.
Only $1 to See All Zacks' Buys and Sells
We're not kidding.
Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.
Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.
See Stocks Now >>
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