#919 -Has Inflation Finally Been Tamed? With Steve Miley

TL;DR

Inflation remains subdued, leading to stock market gains. Treasury yields show consolidation. Fed's stance on interest rates could impact the market. Cryptocurrency and oil trends fluctuate.

Transcript

is inflation finally tamed hi everyone Welcome to the Real Vision Daily Briefing with me today is Steve Miley co-founder and chief analyst at trade day hi Steve how are you great to have you back on yeah hey Maggie I'm doing very well thank you for having me back home so we're a couple minutes late because we've been struggling you know we just ask... Read More

Key Insights

• ❓ Inflation remains subdued globally, with positive movement in the UK.
• 🛀 The stock market rally shows breadth and resilience, with potential for further gains.
• 📉 Treasury yields are on a downward trend, with the shorter-end curve expected to play catch-up.
• ☠️ The Federal Reserve's stance on interest rates will be crucial for market direction.
• 🏤 European markets may underperform compared to the US market due to the ECB's conservative approach.
• 🏅 Gold and the dollar have an inverse correlation, and a bearish dollar outlook could lead to a bullish gold outlook.
• 👲 Small and mid-cap stocks may outperform in the short term, but mega-cap stocks are expected to retain their leadership.

Questions & Answers

Q: What is the outlook for the stock market rally?

The stock market rally is expected to continue, with a focus on breadth and momentum indicators. The market could reach previous highs and potentially experience an all-time high in early 2022 if interest rates remain low.

Q: How are Treasury yields expected to move?

Treasury yields are forecasted to continue decreasing, with the risks skewed towards lower yields. The yield curve on the shorter end may experience an upward movement if the Fed signals a shift towards a more dovish stance.

Q: What is the relationship between gold and the dollar?

Gold and the dollar have an inverse correlation. A bearish outlook on the dollar could lead to a bullish outlook on gold. If this correlation strengthens, gold may reach new highs, potentially surpassing all-time highs.

Q: How are smaller and mid-cap stocks expected to perform compared to mega-cap stocks?

While there may be slightly less dominance by mega-cap stocks, they are expected to continue their leadership. Small and mid-cap stocks may outperform in the short term due to the market's breadth, but mega-cap stocks are more sensitive to interest rate movements.

Summary & Key Takeaways

• Inflation remains low, as indicated by PPI and retail sales data. Global inflation, including the UK, is showing positive movement.

• Stock markets experienced a rally, with the Dow, S&P, and Russell indices advancing. Treasury yields did not follow the same upward trend. The bond market has shown a strong correlation with the stock market, which is unusual.

• The stock market's resilience and consolidation suggest a positive outlook. If yields decrease, stocks are expected to rise further. The Federal Reserve's actions regarding interest rates will play a crucial role in market direction.

• The DAX, CAC, and Footsie show slight underperformance compared to the US market. The ECB's potential slower response to rate cuts may contribute to this underperformance.