April 15

4/15 – Last week, the Labor Dept. reported that the Consumer Price Index for March was up 3.5% from a year ago. Driving the index higher: shelter costs, representing 36.2% of the CPI, were up 5.7% - and showing no signs of abating. So now - faced with the combination of higher-than-expected GDP growth, a stronger-than-expected jobs market, and sticky inflation – the Federal Reserve will likely shift gears again. One of the big concerns is the stock market. In Dec., Wall Street was expecting 6-to-7 interest rates cuts this year. The new forecast is 0-to-2. A big assumption was that lower rates would continue to goose stock prices this year. Current market valuations have at least a half-dozen interest rate cuts baked in. While a no-rate-cut 2024 doesn’t necessarily mean a correction, clearly the bull market equation has changed dramatically, leaving equities (in general) more vulnerable to a sell-off.