CHRIS VERSACE: Good morning Action Alerts Plus members. It's Tuesday, September 20. Markets are trading off ahead of the outcome of the Fed's monetary policy meeting tomorrow and inflation is once again on the top of investor minds. While we here in the US continue to feel the pinch of higher costs and energy bills and food costs, surging food and fuel costs led Japan's annual inflation rate to increase to 3% in August, up from 2.6% in July. The key here is that this is the 12th consecutive monthly increase in consumer prices and it's the fastest pace since September 2014.

Over in Germany, same thing. The annual producer inflation rose to a new record high of 45.8% in August, significantly higher from July. Culprit here, again, energy prices, in particular, remain the biggest contributor in Germany. They were up about 139% year-over-year, really hinging on natural gas, which was up more than 200% year-over-year, as well as electricity up almost 175% year-over-year. Here's the thing though members, even if we exclude energy prices, the August German producer inflation was still up significantly compared to July, hitting 7.9% versus July's 5.3%.

Over in Sweden, again, higher inflation pressures. And this led Sweden's Riksbank to initiate a 100 basis point rate hike, exiting their monetary policy meeting and signaling that because inflation remains too high, there are more rate hikes expected in the coming months.

Now, stepping back from this, we're here in the US, but this does remind us that inflation isn't just a US issue and we should expect additional interest rate hikes in other geographies. From a portfolio perspective and a macroeconomic perspective, we see it adding to the Fed's resolve when it comes to fighting inflation. And both Bob and I think this means the market has yet to fully price in steps to be taken by the Fed in terms of where the Fed funds rate is going and for how long.

Now, this also adds to our concern about recession risk in the coming months ahead, GDP expectations, and as we've been talking increasingly about, earnings expectations for 2023. It does also suggest too that the earnings season that we're soon to embark upon will be characterized by expectation revisions. And this is going to keep us on the cautious pass-- path, excuse me, with the portfolio keeping our inverse ETFs in tow as well as slowly and, as members have come to expect, prudently deploying the portfolio's cash.

Now turning to Ford Motor, last night the company announced inflation-related costs will be roughly a billion higher than expected and it also is thinking that at the end of the quarter, it's going to have something order of magnitude of 40,000 to 45,000 unfinished vehicles waiting for components. This is the latest bang on the drum, if you will, about supply chains. And they continue to remain, not only a headache for companies but us investors as well, adding yet another round of arguably unexpected surprises.

This latest round, however, coincides with a port congestion issue at the Port of Los Angeles due, in part, to what was the expected rail strike that was thankfully averted. It largely means that some 28,000 containers over the next couple of days and weeks are going to be moved and that this should start to be put in the rearview mirror, making it more of a timing issue more so than anything else.

For Ford, it means a lump year than usual second half of the year that skews more towards the December quarter. Here's the thing members, we've seen this before with Ford's shares coming out of the pandemic and it tends to result, yes, in a temporary hit, but we will continue to focus on the bigger picture with Ford. What's that? The accelerating shift towards EVs and the company reaping the benefits of all the cost reduction efforts that it has underway.

So simply put, we're not changing our rating on Ford, we're not changing our price target, we just see this, again, as a temporary timing issue for the company and again focusing here on the long-term with Ford's shares. And that's a wrap for today's roundup. Thanks for joining us. We'll be with you tomorrow.