No recent love for the Magnificent Seven…
- Following the horrific assassination attempt on a former President, polling data is now strongly predicting a second Trump Administration. Meanwhile, President Biden is facing continued pressure to step down from the Democratic ticket for the upcoming election. Markets have been digesting the forecast of another Trump presidency by determining how to be positioned and act towards the now anticipated high tariff and more inflationary environment that is likely to result.
- In the meantime, current inflation readings continue to abate as seen by the recent Consumer Price Index (CPI), a figure released last week. June’s CPI declined with a 12-month rate of 3.0%, the lowest annual increase in three years whereas the Producer Price Index (PPI) reading was less positive with a 12-month rate increase of 2.6% – the largest annual increase since March of 2023. However, the U.S. consumer continues to spend though as retail sales remained flat year-over-year as opposed to expectations of a decline.
- Meanwhile, Fed Chair Powell made a major public appearance at the Economic Club of Washington on Monday. Despite recent inflation data continuing to trend lower, Powell’s public was unchanged with him stating that “I’m not going to be sending any signals one way or the other on any particular meetings.” Further, Chair Powell expressed his belief that the economy is heading for an economic soft-landing and that a “hard landing” did not seem likely at this point.
- The equity markets have had an appreciable rotation in recent days with mega-cap tech stocks experiencing recent declines. Surging forward have been small cap stocks with five days of consecutive gains and a 3.5% gain on Tuesday. This is however a positive sign that the stock market rally is broadening to other parts of the market and showing investors’ confidence in the American economy.