Happy Saturday! Here are the top questions from Ask Titan Anything this week. As always, reach out to us if you have any questions.
Q: What does the PPI report mean for the economy?
U.S. supplier prices rose 6% in January from a year earlier, a sign of still stubborn inflation pressures in the economy. PPI increased 0.7% in January from the prior month, compared with a revised 0.2% drop in December, and significantly faster than the 0.2% average monthly rise in the year before the pandemic. The latest data adds to concerns that the Federal Reserve will need to hold interest rates higher for longer in order to tame inflation. We have been positioning capital in the event of a hotter report like this and will continue to be cautious in the coming months.
Q: Saw that you trimmed LVMH. Haven't they had a good year so far?
As laid out in our Offshore trade comm this morning, LVMH’s (LVMUY) well diversified portfolio of brands have proven to be recession and inflation proof as the company has posted outstanding revenue growth over the last several quarters. Bernard Arnault’s luxury empire is trading close to all time highs following +46% move since the start of Q4 hence our team using recent strength as an opportunity to lock in gains. LVMH’s veteran management team, high-quality business model, and brand value continue to be key pillars of our investment thesis /characterization of LVMH as a high-quality compounder. We also believe that LVMH’s strong capital advantage relative to peers remains under-appreciated, which we believe will translate to outsized market share gains/margin expansion relative to estimates.
Q: Is income from municipal bonds tax free?
The short answer is yes. Income from municipal bonds (issuances from state or local governments) are free from federal tax but may be taxed on the state level. Our automated bonds strategies leverages this tax efficient income strategy and currently allocates ~35% of investments towards municipal bonds. We believe this could be a great way to earn income, diversifying your portfolio, all while lowering your potential tax bill.
Ask Titan Anything is intended to be informational in nature and does not take into account the specific objectives, financial situation, or particular needs of any specific person. Nothing in this content should be construed as investment advice, or a recommendation to buy or sell securities.
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