Markets Resilient Amid Inflation Data

Markets absorb inflation data and move higher for the 4th consecutive week.

There was good news and bad news in Tuesday's release of PPI. While the number was +0.5% for April, versus +0.3% expected, March's initial reading of +0.2% was revised lower to -0.1%. The April reading on CPI helped settle markets a little, which showed that consumers were paying less overall (+0.3% vs +0.4) than originally expected. According to the Fed Futures, September has the highest odds (50%) of the first rate cut - up from 46% one month ago. In addition, 70 out of 108 economists agree that the first rate cut will happen in September.

A potential crack in the armor of the economy is the delinquency rate of consumer debt.

While delinquency rates have risen, with the exception of credit cards, they are not yet at 2007 levels. When we compare current deposit demand levels to those of 2007, we see demand deposits are near all-time highs. There was not a spike in demand deposits until late 2008, when the recession was already over. The reality is that while low-income consumers are stretched, high income consumers do not appear so. Just because we have been reaching all-time highs in multiple equity indices recently, that doesn't mean it's time to "sell in may and go away." The data shows that investing in the S&P 500 Index at all-time highs may affect your returns in the short-term, but really ends up being a positive when holding periods are longer.

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Disclosures

The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

Past Performance does not guarantee future results.