Well, that’s interesting.
Inflation continues to surprise to the upside, but consumers continue to brush it off. Two things will likely play out here – either the consumer is able to spend their way out of a high inflation environment (inflation goes down to acceptable levels before consumer looses strength), or the economy will see a nasty fall off the cliff when consumer finally give up and stop spending. I’m still somewhere in the middle and admit I have no idea where we go from here. Data looks like crap to me, but the market continues to hold up, as does the consumer.
Look at this nonsense… MoM CPI went up .6% vs .4% consensus. Fed will not take their foot off the gas anytime soon and that data point confirms it. Sure, .25% represents lowering the rate of Fed rate increases, but the latest numbers likely push out pauses or reversals further than anticipated just a month ago.
United States Core Pce Price Index MoM
source: tradingeconomics.com
Really, nothing has changed in the economy and most of my positions haven’t changed either. A few themes I’m watching, however, included:
- There will be a good time to buy bond ETFs when the market numbers actually indicate an end to Fed hikes. It may be a few months out, but I have BND, VCSH and SHY on my watchlist.
- Pullbacks in AI stocks should be interesting soon.
- Dividend payers are still a big focus point for me.
Big dates on the U.S. calendar this week:
- Durable Goods Orders on Monday morning
- ISM Manufacturing PMI on Wednesday morning
- IS Non-Manufacturing PMI on Friday morning
Trade ’em well.
