Railroads, plastic, cars, oil, landlines, internet. AI might be new, but innovations that spur secular investment cycles are not. Companies in these high growth industries have long leveraged their first mover advantage to develop seemingly impenetrable moats, allowing some to dominate the S&P 500’s top 10 podium for decades.… Read More
2024 began with consensus expectations of a weaker U.S. dollar due to stretched valuations. However, nearly halfway through the year, the dollar index (DXY) has gained around 4.4% year-to-date, raising questions if the consensus has changed.
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weekly_market_recap-06-24-2024
An inverted yield curve occurs when yields on short-term Treasuries exceed those offered by long-term Treasuries. Historically, an inversion between the 2-year and 10-year Treasuries has been viewed as a warning sign of an economic downturn, although this time, for now, appears to be different.… Read More
The European Central Bank (ECB) began hiking rates in August 2022, five months after the Fed. Since then, bothcentral banks have largely raised rates in tandem. Last week, however, the ECB diverged from its usual alignmentwith the Fed and cut rates by 25bps to 3.75%.… Read More
Brent crude oil prices closed at $82 per barrel on Friday, and while they have backed off from their springtime peak, they still look high relative to where they were five years ago, before the pandemic. However, it’s important to recognize that almost all prices and wage rates are significantly higher today compared to five years ago.… Read More
Last week, investors received relatively hawkish minutes of the latest FOMC meeting, raising concerns about potential further rate hikes. Additionally, an emerging divergence between the economic and inflation surprise indices prompted fears of stagflation. However, the broader context suggests that these concerns are unwarranted.… Read More
Falling inflation in 2H23 encouraged a more accommodative tone from Fed officials. In fact, Fed sentiment, as measured by J.P. Morgan’s Fed Hawk-Dove Speech Score, slowly shifted from hawkish toward a more neutral stance in the fourth quarter. However, after a string of hot CPI prints in 1Q24, heightened inflation uncertainty has caused Fed officials to reassert their hawkish tone.… Read More
Despite weak income growth in early 2024, consumer spending remained resilient, and real wages stayed positive. The personal saving rate, however, slid to 3.6% for the quarter and 3.2% in March, lower than for any year since 2007.
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weekly_market_recap-05-13-2024
This week’s chart shows labor force participation rates in the U.S., Eurozone, and UK. Each market is continuing toexperience tightness with different underlying drivers. Remarkably, the U.S. has added 2.8 million jobs (1.8%growth) in the past year without a reacceleration in wage growth.… Read More
Last week’s initial estimates of 1Q24 GDP revealed a complex picture. At the start of the year, expectations were setfor gradual declines in growth and inflation. However, the data showed a sharp deceleration in headline growth whileinflation, as measured by the personal consumption expenditures price index (PCE), accelerated on a quarter-to quarter basis.… Read More