Economy
Inflation cooled for the month of June, bringing the year-over-year change down from 4.2% to 3.5%. The big drivers for the decrease were energy-related as gasoline prices fell by nearly 10% and broader energy commodities were down 9.5%. Excluding food and energy prices which tend to be more volatile, inflation came in flat for June. It's worth noting that oil prices have risen by nearly 15% for the month of July as the ceasefire with Iran collapsed in recent weeks. The decline in inflation is certainly a positive development and one that could give the Fed some breathing room to delay raising interest rates when they meet at the end of the month. New chair Kevin Warsh testified in front of the House Financial Services Committee this week and drove home the point that the Fed has no tolerance for high inflation. He said that the Fed is not putting too much stock in the June data and that "mission accomplished" is not his view.
Markets
We're officially underway with earnings season and off to a strong start. Expectations for the quarter are lofty, but so far the early reporters have delivered. Big banks reported earnings this week indicative of a health consumer. Despite the strong start in earnings season, the S&P 500 finished the week 1.55% lower as the war with Iran dominated the news cycle. Tech stocks led the way lower as concerns about the sheer cost of the AI buildout remain at the forefront of investors' minds. Markets will look to shake that off next week when we hear from some of the largest companies including Alphabet and Tesla, which both report Wednesday afternoon.
What We're Reading
- Brief Drop in Mortgage Rates Points to Another False Start for the Housing Market - WSJ
- The Hedonic Treadmill- Seth Godin
Have a great weekend.
Dogwood Wealth Management