Navigating Inflation and Trade Shifts: Where to Invest Now

The U.S. Bureau of Labor Statistics’ April Import/Export Price data, released today, underscores a critical divergence: while import prices for industrial inputs and energy remain stubbornly elevated, export prices in tech and agriculture reveal pockets of global demand resilience. This creates a high-stakes landscape for investors to position in sectors insulated from cost pressures or poised to capitalize on pricing power. Let’s dissect the opportunities.

The Inflationary Squeeze on Manufacturing

The data shows import prices for nonfuel industrial supplies rose modestly in April, following a 0.1% gain in March. For manufacturers, this means raw material costs—from semiconductors to steel—are still a drag. .

Investment Takeaway: Avoid overexposed manufacturers unless they have hedging strategies. Instead, focus on firms with pricing power, such as machinery exporters (e.g., Caterpillar or Deere) that can pass costs to buyers. Their stocks have underperformed recently but may rebound if global infrastructure spending holds up.

Energy Exporters: The Winners of Geopolitical Turbulence

The March data highlighted a 88.5% annual surge in natural gas export prices, a trend likely sustained in April. With Europe still seeking energy alternatives and Asia’s demand for liquefied natural gas (LNG) rising, U.S. energy exporters are in a sweet spot.

Investment Takeaway: Energy stocks remain undervalued relative to their cash flows. Consider ETFs like XLE or individual players with exposure to LNG exports. The sector’s beta to rising energy prices is clear, and geopolitical risks (e.g., Russia’s gas cuts) could amplify gains.

Tech and Agribusiness: Export Powerhouses to Watch

Export prices for nonagricultural goods rose 2.5% annually in March, driven by tech hardware and industrial equipment. U.S. agribusiness exporters (e.g., soybeans, wheat) also benefit from strong global demand, particularly from China and the Middle East.

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Investment Takeaway: Tech exporters like Texas Instruments (semiconductors) and farm giants like Archer-Daniels-Midland (ADM) offer defensive exposure. Their pricing power is underappreciated; ADM’s stock, for instance, trades at 14x earnings despite 15%+ EBITDA margins.

The USD’s Role: A Double-Edged Sword

A stronger dollar (driven by Fed rate differentials and energy-driven trade surpluses) could pressure U.S. exporters by making their goods costlier abroad. However, energy and tech firms with global pricing power may offset this.

Investment Takeaway: Short the dollar via inverse ETFs like UUP if trade data weakens, but pair this with long positions in energy exporters. The USD’s trajectory remains key—diversify into foreign equity ETFs (e.g., EWJ for Japan) if the greenback weakens.

Inflation-Linked Bonds: The Safeguard Against Cost Pressures

While the Fed’s pause in rate hikes reduces near-term inflation risks, sticky import costs (e.g., metals, machinery) mean core inflation will linger above 3%. Treasury Inflation-Protected Securities (TIPS) and corporate inflation-linked bonds (e.g., Microsoft’s 2053 inflation notes) provide ballast.

Investment Takeaway: Allocate 5-10% of a portfolio to TIPS to hedge against the risk that April’s import data signals a broader inflation rebound. Pair with short-dated bonds to limit interest rate sensitivity.

Final Call to Action

The April data reveals a clear path:
1. Buy energy exporters (XLE, Cheniere) to profit from geopolitical-driven pricing power.
2. Rotate into tech/agriculture exporters (Texas Instruments, ADM) with global demand resilience.
3. Hedge with TIPS to protect against inflation surprises.
4. Avoid overleveraged manufacturers without pricing flexibility.

The divergence between import cost pressures and export resilience isn’t just data—it’s a roadmap to outperform in 2025. Act now before these trends fully price in.

All data as of May 16, 2025. Past performance ≠ future results.