Market Musings 5/15/2024

Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!

Markets pop on rate cuts and “Goldilocks” soft landing optimism after inflation growth slightly moderates in April.

Well, cue the #RateCuts cheer.

This morning’s CPI release saw both overall and core April inflation growing 0.3% M/M. Both metrics came in below expectations.

Even yesterday’s higher-than-expected PPI data was met with optimism with investment services driving most of the upside.

While April inflation continues to reinforce stickier and higher inflation near-term, markets are cheering at least the accelerated growth appears to be moderating.

The S&P 500 rose +1% today and surged to an all-time high ending above the 5,300 mark.

While we’re cautiously optimistic, we still believe the Fed will need multiple months of data to be confidence enough that inflation has resumed the downtrend.

At this point, we believe the Fed is unlikely to even be in a position to cut rates until the Fall at the earliest. However, with #RateCuts expectations now down to only 1-2 this year, we think the markets will give the Fed time to get comfortable.

Going forward, outside of the weekly economic data drip, we see April’s PCE release at the end of the month as the next significant catalyst for the #RateCuts narrative to take the next step.

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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.

Original Photo by Pavel Danilyuk.