Investment Management

Mid-Year Winners The performance gap between the equal-weight S&P 500 and the regular-weight S&P 500 is on track for it’s largest gap since the metric started 30+ years ago. This indicates a growing split between haves and have-nots. The winners are obvious, they are the technology leaders with the largest balance sheets like NVidia, Meta, Google, Apple, and so on….

Inflation Truflation’s US inflation metrics fell to 2.98% this week. This is a decent proxy for the direction of the CPI and PCE, the official government inflation statistics used to set policy. I’ve seen a lot of complaints in the media about prices still being high. An obvious but important note is that falling inflation does not translate to falling…

Global Inflation Over the past week, the real-time US inflation tracker Truflation has dropped another .5% to 3.36%. The UK is still stuck with high inflation, with official numbers at 10.1% and the Truflation figure at 15.28% (down from 22%). The bad spots are still Argentina with an eye-watering 109% inflation rate and Turkey at 44%. The rest of the…

CPI Inflation The trend is your friend. Thankfully yesterday’s CPI came in just a bit lower than last month’s at 4.9%. From a peak of 9.1% in June ‘22, each of the last 10 reports has ticked progressively lower. The Fed’s rate hikes aim to lower inflation to 2%, which is still far away despite considerable progress. The rate hikes…

Fed & Yield Curve The Fed raised rates yesterday to 5.25% for what will likely be its last rate hike. It’s hard to see what would push the Fed to increase rates even further from here. The next CPI report will be out on May 10th followed by June 13th. The slow monthly periodicity is not helping, but that’s what…

Fed Updates In all likelihood, the Fed will raise interest rates from 5% to 5.25% next week for their May meeting. The next CPI inflation report is on May 10th. The hope is that inflation continues to tick down again, widening the gap between the Fed Funds and inflation and setting the stage for the Fed to cut rates eventually….

IMF on Rates The IMF released its latest World Economic Outlook last week, focusing on the messy state of global affairs and the impact that may have on interest rates. They expect interest rates to return to pre-pandemic levels based on the long-term trends that were present before Covid. Those trends include: slowing productivity, aging demographics, de-globalization and the increased…

Rates vs Inflation Yesterday the March CPI print showed a 5% increase YoY, down from 6% in February. The Fed’s interest rate is also 5%, marking this moment as the first time that interest rates have at least matched inflation. It seems likely the Fed will raise rates to 5.25% in three weeks unless something new gives them a reason…

Jamie Dimon released his annual letter this week, giving us some insight into his view of the economy and the largest bank in the US. Here are some notes on what stood out: The term Shadow Banks was highlighted as a major competitive threat to JP Morgan and the entire banking industry. Shadow Banks is a vague term that’s meant…