One theory making the rounds is that if President Trump gets back into office, inflation will surge. The idea is that if he returns, Trump will raise tariffs, reduce immigration, and jawbone the Federal Reserve to cut interest rates too much, all of which could push inflation higher, maybe even to where it was a couple of years ago when it peaked at 9.1%. We are certainly not optimistic about the path of inflation in the decade ahead. The Consumer Price Index (CPI) went up at only a 1.8% annual… View More
In a volatile week, equities advanced (S&P 500 +0.56%) for the second straight week. On generally good earnings reports, big-cap tech stocks were the standout. The best sectors were utilities (+3.44%) and consumer discretionary (+1.60%); the worst sectors were energy (-3.27%) and financials (-0.58%). While we think Goldilocks will remain a fairytale, the April employment report certainly exhibited Goldilocks characteristics (job growth slowed to a still respectable 175,000, and averag… View More
No shortage of things to discuss after today’s Fed statement and subsequent press conference. While the Fed did not cut rates – and nobody expected them to – today’s focus was on how the Fed would respond to the turn higher in inflation to start 2024. But for all the questions, there was a distinct lack of clear answers. Let’s look first at today’s Fed statement, which included more changes than usual. In particular, a new sentence was added noting that “there has been a lack of f… View More
After three straight weekly declines, equities were higher last week (S&P 500 +2.68%). Corporate earnings, especially big tech, were a key driver. Best sectors were technology (+5.11%) and consumer discretionary (+3.52%); worst sectors were materials (+0.66%) and energy (+0.74%). 1Q GDP came in lower than expected (1.6% vs 2.4%), but internals were generally okay. Core PCE inflation, however, was expected to be 3.4% but instead came in at 3.7%. After last week's stronger than expecte… View More
Stocks were on a roller coaster most of the week (S&P 500 -3.1%, Dow Jones +0% and NASDAQ -5.5%). Dominating the discussion were the geopolitical volatility in the Middle East and hawkish Fed rate conversation. The best performers were utilities (+1.9%) and consumer staples (+1.4%); the worst performers were technology (-7.3%) and consumer discretionary (-4.5%). 1. Fed Chair Powell sounded more hawkish, stating that it is likely to take longer than previously thought to achieve confiden… View More