Happy Friday to our Fireside Charts readers! On this day 33 years ago, Standard & Poor's (S&P) began disseminating S&P 500 index values once every 15 seconds. The market values of the three largest companies in the United States (Microsoft, Apple, and Amazon) have grown in June. This contributes the S&P 500 information-technology sector rebounding nearly 9% in the past six sessions and the technology sector being up 24% for the year. The U.S. CPI report is benign for now, and higher wage growth is not feeding through to service-sector prices. A chart illustrates the New York Fed's recession probability on the S&P 500 year-over-year changes. Finally, US crude oil inventories continue to rise but energy demand has decreased.
1. As the biggest get bigger, a market cap weighted index like the S&P 500 can appear "distorted". This eerily reminds me of 1999 when a few titans kept the market surging while the broad markets were in decline...
Source: FactSet, as of 6/13/19
2. U.S. Inflation remains benign, opening the way for the FED...
Source: WSJ Daily Shot, as of 6/11/19
3. Even the long "overdue" increase in wages has not caused the FED's preferred measure of inflation, the PCE, to show any worrisome inflationary pressures.
Source: Bureau of Labor Statistics, as of 6/11/19
4. Note the scale for the recession probability is inverse (lower means a higher % chance)...
Source: Federal Reserve Bank of New York, as of 6/13/19
5. The bond markets are pricing in an 85% chance of a FED rate cut by July. Careful what you wish for...
Source: Cantor and Bloomberg, as of 6/13/19
6. U.S. oil and gas production continues to hit new highs, helping increase our stocks and putting pressure on energy prices.
Source: U.S. Energy Information Administration, as of 6/13/19
7. Meanwhile North American energy demand has slowly decreased. Note geopolitics and terrorism can move prices quickly...
Source: BP, as of 6/11/19
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Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.
