Three Things to Know & Watch

By Bill Hornbarger, Chief Investment Officer

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Three Things to Watch

  • The consumer price index (CPI) for May will be released Friday will be the focus of the week. Headline CPI is expected to remain steady at 8.3%, slightly below the highs from earlier this year while core CPI (excluding food and energy) is expected up 5.9%, a meaningful decline from the 6.5% peak in March. Gasoline prices were up approximately 8.2% in May, which will keep pressure on the headline number.
  • Real average weekly earnings will also be released on Friday. In April they were -3.4% reflecting the impact of the highest inflation in 40 years and the pressure that consumers face from higher prices.
  • On Friday, the University of Michigan Consumer sentiment will be reported. High gas prices and volatile stocks have weighed on sentiment and last week’s recession warning from JP Morgan CEO Jamie Dimon will weigh further on consumers. Sentiment is already below the Covid recession levels and near readings last seen during the Global Financial Crisis.

Three Things to Know

  • Global equity mutual logged funds +$21 billion worth of inflows last week; the highest in 10 weeks and levels not seen in a while. Almost 100% of inflows went to the U.S. markets. (Source: The Market Ear, Goldman Sachs)
  • Despite the recent weakness and volatility, the S&P 500 is up 27% since the beginning of 2020 for an annualized return of 10.4%, or very close to its long-term average. (Source: Bloomberg)
  • The value (in U.S. dollars) of global debt trading with negative yields has fallen to $2.5 trillion after staring the year at $11.3 trillion. Higher global inflation and central bank rates are leading to tighter financial conditions. (Source: Bloomberg)

The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.