To The Moon

Summary

• Introducing a new recurring series to help you gauge the current state of the economy and the market: The Macro Brief.
• This monthly series will showcase what our analysts say about the latest economic and market news and what it could mean for investors.
• We'll highlight the popular themes each month and provide counterpoints if applicable.
• In addition, we will provide a market and economic snapshot to review the month's most important numbers.

Editor's note: Seeking Alpha is proud to welcome SA Editor Kevin M. Sanford as a new contributing analyst. You can become one too! Share your best investment idea by submitting your article for review to our editors. Get published, earn money, and unlock exclusive SA Premium access. Click here to find out more »

Matteo Colombo

Introduction

We aim to give investors the tools they need to understand the complex forces that drive the economy and financial markets.

Recently, we introduced new content in the form of monthly series (Rare Picks, New Analysts, The ‘Undercovered’ Dozen), primarily focused on specific investing topics and stock picks to highlight some of our analysts' brightest ideas.

Today, we're excited to introduce a new and our first macro-based series: The Macro Brief!

This monthly series will highlight our analysts' latest economic news coverage and market trends to help investors gauge the ever-volatile financial landscape.

In addition, we will provide a market and economic snapshot to review the month's most important numbers.

The economy is the foundation of financial markets, influencing everything from corporate earnings and consumer spending to central bank policy and inflation.

Understanding economic trends, policy decisions, and sector activity can be critical when assessing market opportunities.

Investors with a firm grasp of the economy's current condition and future direction can use this information to make informed investment decisions.

As any great economist will tell you, everything is in the eye of the beholder. So, each month, in addition to highlighting the most significant trending topics, we will also highlight counterarguments where applicable.

As always, we invite you to enrich the conversation by sharing what you see and think about the state of things in the comments.

Without further ado…

May’s Market and Economic Snapshot

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May’s Trending Themes

The Fed’s Interest Rate Dilemma

The Market Is Beginning The Process Of Pricing In Fed Rate Hikes | Mott Capital Management

“Market expectations for interest rates in 2026 are significantly higher than the Fed's projections, suggesting a higher neutral rate and the potential for rate hikes in the future.”

“If rate hikes may be again needed at some point down the road, and the market perceives that is likely to happen, pricing will happen well in advance of Fed speak and would also begin to show up in financial conditions indexes, which should begin to show signs of tightening.”

The Fed Should Cut Rates Before A Credit Crisis Forces Their Hand | Louis Navellier

“Here are five reasons why I think the Fed might want to consider cutting rates sooner – in June or July:

Reason #1: The Fed has a dual mandate – promoting jobs and controlling inflation. To date, they have focused almost 100% on inflation, but the Labor Department reported last week that weekly jobless claims rose to 231,000 in the latest week, up from a revised 209,000 in the previous week…”

5 Things Dividend Investors Need To Know About The Economy And Interest Rates | Dividend Sensei

“AI and four other technologies are converging to potentially accelerate future US GDP growth from 3% to 9%. The growth outlook for US stocks has doubled in recent years, to 12%, thanks to the rise of big tech, due to investing in R&D at high rates of return. Future S&P earnings growth potential ranges from 12% to 48%, depending on how much of a growth boost those five convergent technologies prove to be.”

Let’s Stop With The Rate Hike Talk Already | WisdomTree

“So, how did we go from point A (rate cuts) to essentially point Z (a rate hike)? Certainly, the economic data released in April was a starting point, specifically on the inflation side of the equation. CPI and PPI both came in hotter than expected, basically halting the disinflation trend that had been prevalent in 2023.”

Inflation Concerns Continue To Dominate

'True' Inflation Is Higher Than The 'Official' Numbers | Bret Jensen

“Despite solid headline economic numbers and equities continuing to make all-time highs, a good portion of the consumer population is under increasing duress.”

“Why inflation is likely much worse for many segments of the population than the monthly CPI readings are showing…”

Focus On The Balancing Act Between Growth And Inflation | Lawrence Fuller

“A soft landing requires a balance between just enough growth to sustain the expansion and just enough slowing in that rate of growth to bring the rate of inflation down to 2%. Every data point that gives us a pulse on economic activity is going to be scrutinized for whether it is too strong or too weak.”

This Current Wave Of Inflation Is Not Transitory, The First Wave Was | Ronald Surz

“[April’s inflation] is a disappointment for those who expect the Fed to lower interest rates, but they continue to forecast a reduction sometime this year, say in September, perhaps even lowering the inflation target. But the facts are (1) the current wave of inflation will last a long time, and (2) the first wave would have ended without the Fed's help because it was transitory.”

Counter-point:

The 'Good News' On Inflation | Joseph Calhoun

“Notice too that current inflation expectations are consistent with expectations prior to and just after the 2008 financial crisis. You'll notice too that, while inflation expectations didn't rise as much as actual inflation, they did rise during this recent bout of price hikes”

April’s Disinflation Delivery | American Institute For Economic Research

“On a continuously compounded annualized basis, consumer price inflation fell for the second straight month…We are still a ways away from the Federal Reserve’s 2-percent goal. But at least we’re heading in the right direction again.”

Fragmented Market Strategies Reflect Volatility

SPX: A Generational Shorting Opportunity | Stuart Allsopp

“Shorting stocks has historically been a losing strategy, but current conditions resemble those that occurred at the 2000 bubble peak and gave rise to 125% gains for short sellers.”

S&P 500 And VOO: Here's The Bullish Case | Sungarden Investment Publishing

“Many parts of the market took a breather the past few years, and that could end up being a "pause that refreshes" as opposed to needing a full flushing of the whole stock market, all sectors.”

Sentiment Speaks: The End Of Objectivity In Market Analysis And Potentially The Bull Run Too | Avi Gilburt

“I want to tell you that I am on high alert for a potential 25% reversal in the market to the downside. Now, before you get all excited, please recognize that I am not saying this move will certainly happen. I am simply saying that the market has now moved into an environment during which such a move can develop.”

Billionaires Are Signaling The Market Is Due For A Correction: Our Approach | Samuel Smith

“While billionaires like Jamie Dimon and Warren Buffett are becoming increasingly cautious and are amassing cash on their companies' balance sheets, and the markets are signaling that their valuations are quite stretched even as geopolitical and macroeconomic signals imply that risks are rising, we are not running for the hills.”

Why The Bond Market Is No Longer The 'Smart Money' | Lyn Alden Schwartzer

“Inflation manifested in recent years without the bond market anticipating it at all, and it can certainly happen again in the future. The same is true for periods of disinflation or economic deceleration. And the bond market can’t really front-run the sheer supply of Treasuries that will be coming to the market over the upcoming years….”

SPY: Time To Be Contrarian And Underweight | Oakoff Investments

“The US outperformed Europe in profit growth by more than double - hence the premium in valuation. My thesis today is to allocate capital in markets outside the US….”

Conclusion

We hope our analysts' insights serve as a valuable financial compass for investors seeking to make informed investment decisions.

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Please let us know if you have any suggestions you’d like to see added to this series and any ideas for new additional recurring series. We're always open to your valuable feedback.

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