U.S. economic data continue to show resilience, but markets are responding with less tolerance for disappointment. As earnings expectations remain high and Federal Reserve policy stays restrictive, equity performance is becoming more selective—placing greater emphasis on fundamentals, valuation, and policy direction.

US Economy

 

The S&P Global PMIs indicated continued expansion in the US private sector. The manufacturing PMI edged up, while the services index held stable. The University of Michigan consumer sentiment index was revised up to a five-month high, driven by upward revisions to both current conditions and future expectations.

US consumers are set for a strong tax refund season, with Morgan Stanley estimating individual refunds will be about 20% higher year over year, boosting personal income and supporting consumption.

 

 

KFC suffered the largest market-share loss among 76 restaurant chains since 2019.

 

 

This chart shows whether AI is likely to enhance or replace different occupations.

 

Source: Data Is Beautiful   Read full article

 

Durable goods orders jumped by 5.3% month over month, well above the consensus estimate. The jump was due to a surge in volatile commercial aircraft orders. Stripping out transportation, orders still rose a robust 0.5%.

 

US Stock Market

 

Tesla’s valuation remains extreme, exceeding the combined market cap of the next 20 automakers.

 

 

Buybacks have driven 27% of S&P 500 returns since 2011.

 

Source: PGM Global via @patientinvestor

 

Global silver reserves total about 641,000 metric tons, with Peru alone holding about 22%.

 

 

The Fed

 

Inflation expectations were revised down.

 

 

The FOMC kept the Fed funds target range unchanged at 3.5%–3.75%, in line with consensus. Governors Stephen Miran and Christopher Waller dissented in favor of a 25 bps cut. In the statement, references to downside risks to the labor market were removed and the new language stated that the unemployment rate has “shown some signs of stabilization.” Regarding inflation, the statement maintained that “inflation remains somewhat elevated,” while the reference to inflation moving up since early last year was removed.

 

 

Great Quotes

 

“There are decades where nothing happens; and there are weeks where decades happen.” – Author Unknown

 

Picture of the Week

 

Sequoia National Park in winter

 

 

 

All content is the opinion of Brian Decker