The latest read on consumer inflation came in right as forecast, giving investors further reason to maintain and increase stock and bond market exposure. The model portfolio is trading with a nice tailwind to its back, and I like Apollo Tactical Income Fund (AIF) here, notes Bryan Perry, editor of Cash Machine.

The Consumer Price Index (CPI) for November rose just 0.1% on the headline number and 0.3% for the core number, putting annual inflation at a 3.1% clip. This is still above the Fed’s 2.0% target rate, but what the market cares about is the trend, which is lower.

The consumer drives 70% of the US economy, and with oil prices recently trading below $70, gas and transportation prices are coming down right into the holiday travel season. It is a welcome development that will hopefully translate into some rate cuts by the Fed in 2024.

Most positions are moving up and to the right in steady fashion as a result. High-yield debt, tactical debt, business development companies (BDCs), REITs, covered-call ETFs, covered-call closed-end funds, preferred stocks, and utilities are all in the sweet spot for garnering very attractive yields against a backdrop of declining long-term bond yields. We’re in a good place.

That is why I like AIF, which recently yielded 10.7%. The closed end fund invests in a portfolio of senior loans, corporate bonds, and other credit instruments.

Apollo Tactical Income Fund (AIF)
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I’ve got a couple more high-yield candidates on my short list that I’m researching a bit further, so be on the lookout for one or two new recommendations before long. Let’s hope for a strong finish to 2023 and a great start to 2024.

Recommended Action: Buy AIF.

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