'Rise of AI' continues to fuel market strength: Strategist

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The Federal Reserve,Interest Rate Policy,Equity Markets

According to the US Census Bureau, retail sales growth in May slowed to 0.1% versus an expected 0.3% increase for the month. What does this signal from...

According to the US Census Bureau, retail sales growth in May slowed to 0.1% versus an expected 0.3% increase for the month. What does this signal from consumers and for potential changes in the Federal Reserve's interest rate policy?

We are not far from those all time high numbers and comparing that to maybe the slowing that we've seen in the econ data.Well, what we have seen so far is that despite the fact that markets priced out five cuts uh by the fed in 2024 compared to beginning of the year, equities are very strong.And the reason that equities are very strong is because we have seen very strong earnings driven by A I and tech related names.

But before we even entertain the possibility of productivity boom, we have to go through the Capex build out phase that in the context of supply constraints also with the low carbon transition, competing for some of the same resources can be inflationary. What I'm saying is that before it gets to the deflationary stage through the productivity boom, we are likely going to see the inflationary effect from the Capex boom first.So it may not be immediately showing up in the numbers.

 

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