February brought a healthy pause as inflation cooled slowly and the Fed stayed cautious. Stocks consolidated with broader leadership, while bonds again offer attractive yields and diversification.
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This week, CEO Eric Boyce, CFA discusses: 1. the changes inherent in the Supreme Count ruling on the IEEPA tariffs of the Trump Administration 2. GDP for the 4th quarter lighter than expected, driven in part by the government shutdown. Real final sales to domestic purchasers remains strong, suggesting that consumption remains robust enough to keep the economy going 3. Trade deficits higher, leading economic indicators remain negative; regional Fed surveys remain very positive, however. Leading indicators remain weak 4. One third of the federal debt is going to have to be refinanced in 2026 at a much higher interest cost. 5. government balance sheet not nearly as in good of shape as the consumer and commercial sector. Increased activity may result in additional capital spending next few years 6. equities in high demand; recent sell off has reduce valuation multiples, but US is still overvalued relative to the rest of the world. Earnings growth expected to be stronger in emerging markets than in the US 7. Hyperscaler spending set to ramp in 2026 - investors beginning to price in some skepticism 8. private investment stocks under pressure due to credit concerns
This week, CEO Eric Boyce, CFA discusses: 1. retail sales off for the month, breaking a trend; consumer prices +2.5% year-over-year, but much higher in some important categories 2. wages stable, but higher charge card delinquencies keep our focus in check. Household debt to GDP still very low, however 3. profit margins for S&P 500 driven by large tech; earnings estimates still favorable overall, but AI benefit will likely be measured in years, not months 4. trends in economic surprises suggest higher long term bond yields... 5. with recent sell off, some changes in both institutional and retail investor sentiment, although trade volumes remain high 6. increased capital spending but public companies, offset by lower stock buyback and debt paydown 7. job market slowdown continues at slow pace; job growth negative outside of healthcare since beginning of 2004 8. Gold disconnect with interest rates, but increased demand from foreign central banks, including China, driving some of that
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This week, CEO Eric Boyce, CFA discusses: 1. Risks to inflation from weak dollar, rising industrial prices and wages 2. ISM Services index remains positive, labor weak (job openings) 3. Strong response in energy prices, stocks - rhetoric on geopolitical developments 4. concentration of wealth and the pending wealth transfer 5. increased stock market breadth; tech stocks in correction; net profit margin and earnings per share growth remains strong across the S&P 500 equal weight index 6. international stock diversification benefit remains even if US earnings growth has far outpaced global earnings ex-US 7. yield curve as steep as its been in more than 2 years 8. lots of dry powder at private market funds ready to deploy 9. Bitcoin/crypto showing its volatile head 10. As a percent of the total economy, capital spending by the AI hyperscalers likely to exceed the US interstate highway system in the 1950-60's and the railroad build out before the civil war
This week, CEO Eric Boyce, CFA discusses: 1. Economic growth estimates for the 4th quarter lower, but numbers still expected to be good. 2. Leading indicators, port container volume down; factory orders slightly higher; retail sales slight uptick 3. comments on housing supply, significant shifts in the rental market, prices likely to continue to show slower growth 4. productivity higher likely due to AI; still risks of inflation, though, due to prices paid by producers 5. dollar remains weak, metals sell-off Friday in part due to new Fed chair nominee; money market inflows still robust despite interest rate decreases 6. quarterly earnings surprises lower; description of what to expect when earnings and economic growth are both positive 7. credit issuance going to be high, followed by refinancing of 1/3rd of all Treasury paper outstanding this coming year.
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Growth stays resilient as labor cools and core inflation hovers near ~2.8%. Fed likely pauses after 2025 cuts while leadership broadens beyond megacap tech; watch tariffs, geopolitics, and an “AI bubble” reset.
This week, CEO Eric Boyce, CFA discusses: 1. Decision dilemma with FOMC rate meeting coming up - sticky inflation offset by weaker labor market 2. discussion of inflation components and influences 3. discussion of wages and income 4. residential housing, rental market, home improvement spending 5. exports, gold market and gold versus treasury holdings at foreign central banks 6. institutional and individual sentiment remains strong for risk assets 7. important market rotation underway - favoring value, equal weight, small cap and lower quality 8. balance of earnings growth shifting away from the Mag 7