Positive Economic Data Over-shadowed By Tariffs

Tariffs news consumed investors' attention last week, while economic data quietly came in better than expected.

The Fed's preferred measure of inflation showed little movement month-over-month and declined for the 2nd consecutive month on a year-over-year basis. In fact, inflation now sits at the Fed's original target for rate cuts. Personal Spending was higher last month and Personal Income rose higher than expected last month. First quarter GDP was revised slightly higher (from -0.3% to -0.2%) and the Atlanta Fed revised their 2nd quarter GDP estimate from +2.2% to +3.8%. As long as the consumer remains resilient, the economy should continue to grow - reducing the prospects for a recession.

Meanwhile, markets continue to churn higher, despite choppy trading. Last month was

was the strongest performance for equities in the month of May (+6.15%) since 1990 (+9.2%). Historically, when the S&P 500 returns greater than 5% in a month, markets are higher 12 months later 83% of the time. When that 5% month happens to be May, markets have been higher by more than 19% 6 out of 6 times. Last week's Treasury auction of 2yr, 5yr, & 7yr maturities provided some bond stability. Not only was the demand for those maturities strong (as opposed to the 20yr auction the prior week), but "indirect" bidders (i.e., international investors) had the strongest demand on record. The reality is that while tariff news may cause daily shifts in sentiment, the tailwinds of growth appear much stronger than the headwinds of recession at this point.

---

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.