{"id":109063,"date":"2025-02-25T12:05:16","date_gmt":"2025-02-25T12:05:16","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/investing\/economic-inflation-information-create-market-jubilation\/"},"modified":"2025-02-25T12:05:16","modified_gmt":"2025-02-25T12:05:16","slug":"economic-inflation-information-create-market-jubilation","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=109063","title":{"rendered":"Economic & Inflation Information Create Market Jubilation"},"content":{"rendered":"


\n<\/p>\n

\n

Economic & Inflation Information Create Market\u00a0Jubilation<\/h2>\n

\n \t\tJuly 1, 2024 at 12:33 pm<\/a><\/em>\n\t\t \t\t \t\t<\/p>\n

\"\"<\/a><\/figure>\n

Ever since the Federal Reserve went on a crusade to increase interest rates and slow the progression of inflation at the beginning of 2022, investors have been cheering for a Goldilocks-type of economic \u201csoft landing.\u201d Last month, this narrative remained intact.<\/p>\n

The S&P 500 index surged +3.5% for the month, the technology-heavy NASDAQ rocketed +6.0% (fueled by NVIDIA and other AI-related companies), and the Dow Jones Industrial Average a more modest +1.1% move thanks to the contribution of older economy stocks.<\/p>\n

Despite the looming presidential election this November and the recent debate, the stock market has continued on a +56% bull market tear since the October 2023-low, eight months ago (see chart below<\/mark><\/a>). The not-too-hot, not-too-cold economic data have provided comfort to investors. For example, growth in Gross Domestic Product (GDP), the broadest measurement of economic activity, was positive (+1.4%) during the first quarter and it is expected to modestly accelerate in the second quarter (+2.2%), as\u00a0forecasted<\/a>\u00a0by the Federal Reserve Bank of Atlanta.\u00a0<\/p>\n

\"\"<\/a><\/figure>\n

In addition, the job and inflation stories are staying consistent with the \u201csoft landing\u201d plot line, as well. The unemployment rate has been creeping higher, but currently remains near\u00a0multi-decade lows<\/a>\u00a0at 4.0%. Inflation also continued its downward trend as evidenced by last week\u2019s Core PCE inflation data (the Federal Reserve\u2019s favorite inflation gauge), which came in at +2.6%, the lowest level since March of 2021 (see chart below<\/a>).<\/p>\n

\"\"<\/a><\/figure>\n

Gasoline and food costs are significant inputs to the overall declining inflation dynamics. The two largest crops in the United States are corn and soybeans, and with those prices down significantly year-over-year (see chart below), it should come as no surprise that consumers are finally seeing some relief in skyrocketing food prices. Declining gasoline prices have also chipped-in to the improving inflation outlook.<\/p>\n

\"\"<\/a><\/figure>\n

With all these economic statistics harmoniously aligning with a \u201csoft landing\u201d scenario, investors are currently comfortable in forecasting one interest rate cut over the next six months, and three and a half interest rate cuts over the next 12 months (see chart below).<\/p>\n

\"\"<\/a><\/figure>\n

Source:<\/strong>\u00a0Yardeni Research<\/em><\/p>\n

But a bull market cannot survive on interest rate cut expectations alone. Over the long-run, stock prices generally follow the direction of corporate profits, and as the chart below indicates (red line<\/a>), fortunately, the path of profits has been rising after a period of stagnation last year.<\/p>\n

\"\"<\/a><\/figure>\n

Source:<\/strong>\u00a0Yardeni Research<\/em><\/p>\n

The last eight months have been an exhilarating ride in the overall stock market, which has been propelled by the multi-trillion dollar technology companies participating in the A.I. (Artificial Intelligence) buildout revolution (i.e., NVIDIA, Microsoft, Alphabet-Google, Apple, Meta Platforms, Amazon, et.al.). However, neither trees nor stock markets can grow, uninterrupted, to the sky forever. The recent environment has been jubilant for investors, but party participants cannot go on forever without experiencing a hangover. The best advice is to celebrate responsibly, while managing the risk of your investment portfolio, because eventually the cops will arrive and the party will come to an end.<\/p>\n

www.Sidoxia.com<\/mark><\/a><\/strong><\/p>\n

Wade W. Slome, CFA, CFP\u00ae<\/strong><\/p>\n

Plan. Invest. Prosper.<\/em><\/p>\n

This article is an excerpt from a previously released Sidoxia Capital Management complimentary newsletter (July 1, 2024).\u00a0<\/mark>Subscribe Here<\/strong><\/a>\u00a0to view all monthly articles.<\/mark><\/p>\n

DISCLOSURE:\u00a0Sidoxia Capital Management (SCM) and some of its clients hold positions in individual stocks , certain exchange traded funds (ETFs), including NVDA, MSFT, GOOGL, AAPL, META, and AMZN but at the time of publishing had no direct position in any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC\u00a0Contact page<\/a>.<\/p>\n

\n\t\t\tEntry filed under: Uncategorized<\/a>. Tags: ai<\/a>, artificial intelligence<\/a>, Core PCE<\/a>, economy<\/a>, Federal Reserve<\/a>, finance<\/a>, GDP<\/a>, inflation<\/a>, interest rate cuts<\/a>, investing<\/a>, nvda<\/a>, nvidia<\/a>, PCE<\/a>, soft landing<\/a>, stock market<\/a>.\t\t<\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"

Economic & Inflation Information Create Market\u00a0Jubilation July 1, 2024 at 12:33 pm Ever since the Federal Reserve went on a crusade to increase interest rates and slow the progression of inflation at the beginning of 2022, investors have been cheering for a Goldilocks-type of economic \u201csoft landing.\u201d Last month, this narrative remained intact. The S&P […]<\/p>\n","protected":false},"author":1,"featured_media":109065,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[96],"tags":[7957,11647,11406,6594,49384,11209],"dealstore":[],"offerexpiration":[],"class_list":["post-109063","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-create","tag-economic","tag-inflation","tag-information","tag-jubilation","tag-market"],"yoast_head":"\nEconomic & Inflation Information Create Market Jubilation - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=109063\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Economic & Inflation Information Create Market Jubilation - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"Economic & Inflation Information Create Market\u00a0Jubilation July 1, 2024 at 12:33 pm Ever since the Federal Reserve went on a crusade to increase interest rates and slow the progression of inflation at the beginning of 2022, investors have been cheering for a Goldilocks-type of economic \u201csoft landing.\u201d Last month, this narrative remained intact. 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