Transcript

This morning, PPI, the Producer Price Index, came at the worst level it has in 3 years; and here’s what it means for stocks: More Concentration. Right or wrong – I think wrong, but who am I to say? – that a substantial cohort of stocks needs a rate cut to work. Toasty PPI complicates the case for a Fed rate cut that seemed all but guaranteed only 48 hours earlier when the CPI, or the Consumer Price Index, didn’t raise any flags.

As a result, we now see money rotating back into the concentrated cohort we know inarguably, for a fact, do not need a cut to execute. I’m talking about the Mag 7 – well, except maybe Tesla (TSLA) – some select technology names like Spotify and Netflix, and of course, there are banks that benefit from higher short term rates like JPM, WFC, or BAC, to name a few. Don’t worry if your portfolio today is more red than green.

It’s the rotations like these that keep bull markets alive by making sure that certain areas of the market don’t overheat and that others don’t get left behind.

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