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US stocks again soared to fresh all-time highs on Wednesday "Powell hinted the stage is almost set for lowering interest rates from two-decade highs, pointing to a cooling in inflation and in the jobs market. He also cautioned that keeping rates." "But a key test for stocks and rate-easing prospects lies ahead in the crucial consumer inflation report due Thursday. While a cooler reading will cement the likelihood of a Fed policy shift in September, a too-cool print could revive concerns about a recession and the labor market". https://lnkd.in/givpEnna

Tactical Alpha Strategy | Mag 7 Stocks Flex, Again - Justin Collazo The PCE has much more sway as it pertains to the stock market. Bloomberg economists believe the PCE will register the smallest pace all year, with declining gasoline prices and flat food and beverage inflation. Unfortunately, they think it will likely re-accelerate into the 2H of the year. If PCE comes in slower than expectations, is it possible that the markets are setting up for a big July? Yes, as the seasonal tailwinds for the 1H of July are some of the best of the year. Couple that with positive pre-election seasonality, and July has the potential to be gangbusters. As we mentioned above, there really wasn’t much movement in the indexes as large caps took the baton once more while the rest of the market did very little. This is evidenced in the SPX AD/Decline which has retraced most of the gains from last week. Read full story here: https://buff.ly/45GUitc For more information on our #tactical #alpha #strategy product, and other Aletheia Capital research, please contact info@aletheia-capital.com #investments #advisory #ideas #fintech #InYourCorner

📊 US Stocks Reach Record Highs on Slower Inflation Pace In an encouraging sign for investors, US stocks closed at record highs yesterday as April’s inflation data showed a slight decrease to 3.4%. This has increased confidence in potential interest rate cuts by the Federal Reserve later this year. Key Points: 1️⃣ Inflation Update: The consumer price index (CPI) for April came in at 3.4%, down from March's 3.5%, ending a four-month streak of higher-than-expected inflation. 2️⃣ Market Reaction: The S&P 500 climbed 1.2%, reaching a new record high, while the Nasdaq Composite rose 1.4%. 3️⃣ Interest Rate Outlook: Traders are now fully pricing in the possibility of two Fed rate cuts this year. This news also follows promising inflation data from the EU, suggesting broader economic stability. Understanding these trends is crucial for crafting informed investment strategies. Let's discuss how these developments could impact your portfolio and future financial planning. #USStocks #Inflation #MarketTrends #InvestmentStrategy #FinancialPlanning #EconomicUpdate

Market Update—Month Ending July 31, 2024 Posted August 6, 2024 Quick Hits 1: Mixed Month for Stocks Stock returns were mixed in July. 2: Bonds Positive Falling interest rates led to positive bond returns for the third consecutive month. 3: Inflation Cools Inflation showed signs of continued improvement during the month. 4: Improving Economic Growth Other economic reports released during the month showed signs of improvement. 5: Risks Remain Markets face a variety of risks in the second half of the year. Encouraging Backdrop and Positive Outlook 6: Markets and the economy set for continued growth. Read it here: https://rb.gy/7r64t1

Last week, U.S. stocks reached new all-time highs, with small-cap stocks leading the charge. Markets rallied after the Federal Reserve’s decision to implement a larger-than-expected 50-basis point rate cut. However, the Fed’s mixed messaging—acknowledging solid economic growth while hinting at more rate cuts—suggests potential for abrupt policy shifts and market volatility. Meanwhile, U.S. 10-year Treasury yields edged up to around 3.75%, recovering from 15-month lows. The yield curve between two- and 10-year Treasuries reached its steepest point since mid-2022, signaling changes in investor sentiment. This week, we’re closely monitoring U.S. core PCE inflation data for August, the Fed’s preferred measure. The Fed’s recent rate cut, paired with its unclear messaging, highlights the risk of further surprises if inflation remains persistent. The hotter-than-expected CPI report for August underscores continued inflationary pressures, with wage growth still too strong to comfortably meet the Fed’s 2% inflation target.

Hearing a lot of "when rates come down, stocks are cheaper" talk today after yesterday's 50 bps rate cut by the Fed. 30-year Treasuries were yielding: 3.938% on 12/31/22, 4.018% on 12/31/23, and 4.026% at yesterday's close. Fed rate setting is short-duration and impacts the economy short-term, but should have no impact on the discount rate equity investors are applying to the future expected cash flows of their investments.

Higher Yields Aren't Always Bad for Stocks! When yields rise, it’s key to understand why—different causes can impact the market in unique ways. For example, if yields go up due to rising inflation expectations, it could mean the economy is running hot. But if yields rise because of election uncertainty, it’s more about temporary investor caution. A common view is that “higher yields mean stocks go down,” but it’s not always that straightforward. In the stock market, yields affect valuations: higher yields mean future cash flows are worth less, which can push stock prices lower. So, if inflation is behind the yield increase, it could weigh more on stocks. However, when there’s uncertainty in the market, bond investors may not be satisfied with current yields. They often start seeking alternative bonds that offer higher returns to compensate for the ongoing uncertainty. This selling pressure can push yields up, but it doesn’t always signal a long-term shift. In the current environment, despite the ongoing election uncertainty, equities are supported by a positive earnings season and a downward trend in inflation(Despite the latest CPI). This aligns with the soft landing scenario being the base case for the market outlook. Understanding the reasons behind rising yields helps us see the bigger picture for markets. #FinancialMarkets #MacroEconomics #EconomicOutlook #CPI

The downside surprise in US inflation sees an outperformance of US small-cap stocks compared to US large-cap stocks, increasing expectations that the Fed might begin cutting interest rates. Read our latest market commentary for you, by YOU. https://lnkd.in/eXipvXEV #marketcommentary #markets #investing #longterminvesting

Did you know that small cap stocks have historically proven to be very good hedges against inflation? In fact, small caps have comfortably beaten inflation every single decade going back almost 100 years – averaging 11.5% per year – which is more than 8% above the annual inflation average.* Fall temps may bring cooler inflation – and a rate cut – but as the Federal Reserve (the Fed) hiking cycle stops and cuts enter the equation, both factors could suddenly become tailwinds. We saw an example of that late in 2023 after the Fed stopped hiking and put cuts on the table – the Russell 2000 outperformed the Russell 1000 by 2.3% in the fourth quarter of 2023.** Source: *Returns – Ken French Data Library using Size Portfolio monthly, value-weighted returns averaged for stocks in lowest market cap deciles (1-5). Inflation – Consumer Price Index All items in U.S. City (CPI-U) not seasonally adjusted. Returns & CPI Rate Calculations - for each decade start on year-end of first year and end on year-end 12M later (example: 1930s = 12/31/1930 – 12/31/1940) and are annualized. *2020s: 12/31/2020 – 3/31/2024. **Morningstar Direct; Russell 2000 TR USD daily, total returns (2/1/1995 – 5/12/2024).

KEY TAKEAWAYS US stocks extended a bull market, with the S&P 500 reaching a series of record highs in the year’s first half, led by technology stocks. Core inflation fell slightly but remained above 3% in the US; the Fed kept rates steady, while central banks in Europe and Canada cut interest rates. Small cap and value stocks lagged the market, while high-profitability stocks outperformed, a reminder of the benefits of pursuing multiple premiums.