PDF version available (here)
Economic Indicators:
- Core CPI has ticked up alongside its forecast in recent months as the market awaits the full impact of tariffs.
- PPI came in above expectations, stoking some concern that producers have begun passing on the cost of tariffs.
- Labor market momentum is weakening, as evidenced by slowing payroll growth (estimates subject to change), even as GDP remains stable.
- This could open the window for Fed rate cuts, unless inflation readings continue to edge upward.
Equity Market Insights:
- Investors continue to face a conundrum in equity markets:
- US large cap has the best earnings but a significantly above average valuation.
- Small cap and international stocks are a better value, but expected earnings growth is currently below average—although improving for small cap.
- Maintaining diversification will capture a composition of favorable earnings growth in one market and more favorable valuations in others.
