Here's what the market was expecting for Fed Funds last month. There's been a meaningful shift to higher rates (3.75% by Dec 2024, up from 3.00%) w/ rate cut expectations pushed out (to Dec from Sep)...

Current market expectations for path of the Fed Funds Rate... -Today: Pause -Jul 26, 2023: 25 bps hike to 5.25-5.50% -Sep 20, 2023: Pause -Nov 1, 2023: Pause -Dec 13, 2023: 25 bps cut to 5.00-5.25% -By Dec 2024: cuts to 3.75%

7 US companies have surpassed the $1 trillion market cap milestone at one point or another with Nvidia being the latest. Tesla and Meta both surpassed $1 trillion back in 2021 but have since fallen back, now trading at $822 billion and $703 billion respectively.

(3b) The Enormous Eight All 8 members of the Enormous Eight are now up at least 40% this year, with Nvidia, Meta, and Tesla leading the way with gains of over 100%. Video:

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Truflation's real-time US inflation gauge has moved down to 2.5% from a peak of 12% last June.

Modelo Especial is now the top-selling beer in America with an 8.4% share, up from 7.5% in January. Bud Light has moved down to 7.3% from 10.3% in January, relinquishing the top spot for the first time since 2001.

Markets are now pricing in a 94% probability of a Fed pause today.

US Producer Prices (PPI) increased 1.1% over the last year, the 11th consecutive decline in the YoY rate-of-change and the lowest print since December 2020. PPI peaked at 11.7% in March 2022.

(3a) The Enormous Eight Just eight companies (Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, Tesla and Nvidia) now make up 30% of the S&P 500’s market capitalization, up from 22% at the start of the year. Video:

The 64% probability of a July rate hike (Fed Funds Futures) makes no sense to me. If the Fed is going to pause tomorrow with 4% CPI why would they hike next month with CPI likely to drop down to 3.3%? Video:

The market is pricing in a 93% probability of a pause heading into tomorrow's FOMC meeting. In every meeting since 2009, the Fed has done exactly what the market was expecting it to do. Not a single surprise.

(2) The Sky's the Limit With the debt ceiling suspended, the US government went back to doing what it does best: borrowing money. The National Debt immediately increased $358 billion, the largest one-day spike in history. Next stop: $32 trillion Video:

Tomorrow's news today... BREAKING: AFTER 10 STRAIGHT RATE HIKES, THE FED PAUSES, HOLDING INTEREST RATES AT 5.00-5.25%.

Increases over the last 3 years... CPI Medical Care: +5.5% US Wages: +12.5% CPI Apparel: +14.9% CPI Shelter: +16.4% CPI Food at home: +19.2% CPI Food away from home: +21.7% CPI New Cars: +21.8% Actual Rents: +22.8% CPI Electricity: +23.7% CPI Gas Utilities: +31.5% CPI…

The price of a dozen eggs in the US is now 45% lower than the record high in January ($4.82 --> $2.67).

(1a) Tearing Down the Wall of Worry All is calm again in the equity market. The $VIX has moved down to 13.83, its lowest weekly close since February 7, 2020. Has complacency as measured by the $VIX been a problem for stocks in the past? Video:

2023 Returns... NVIDIA $NVDA: +174% Facebook $META: +128% Tesla $TSLA: +107% AMD $AMD: +100% Amazon $AMZN: +51% Apple $AAPL: +42% Google $GOOGL: +41% Microsoft $MSFT: +40% Nasdaq 100 $QQQ: +36% S&P 500 $SPY: +15% S&P 500 Equal Weight $RSP: +5% Dow $DIA: +4% Volatility $VXX: -51%

(5) The $VIX: Signal or Noise? The $VIX is at its lowest level since February 2020. Should investors be paying attention to this - is there any signal in the $VIX? Video:

Global Inflation Rates...

US wages outpaced inflation on a YoY basis in May by 0.2%, ending the ignominious streak of 25 consecutive months of negative real wage growth. Great to see, hopefully continues.

US Inflation Rate (CPI), YoY % Change Jun 2022: 9.1% Jul 2022: 8.5% Aug 2022: 8.3% Sep 2022: 8.2% Oct 2022: 7.7% Nov 2022: 7.1% Dec 2022: 6.5% Jan 2023: 6.4% Feb 2023: 6.0% Mar 2023: 5.0% Apr 2023: 4.9% May 2023: 4.0% Jun 2023 (Cleveland Fed Forecast): 3.3%

Why was Shelter CPI still moving higher while actual rent inflation has been moving lower for some time? Shelter CPI is a lagging indicator that wildly understated true housing inflation in 2021 & first half of 2022. Shelter CPI has been playing catch up but still only shows a…

After 25 consecutive increases, YoY Shelter CPI has moved down for 2 straight months, from 8.2% in March (highest since 1982) to 8.0% in May. A continued move lower in Shelter inflation will have a big impact on overall CPI as Shelter represents more than a third of the index.

US CPI has moved down from a peak of 9.1% last June to 4.0% in May. What's driving that decline? Lower rates of inflation in Fuel Oil, Gasoline, Gas Utilities, Used Cars, Medical Care, Apparel, New Cars, Food at Home, & Electricity. Rates of inflation in Transportation, Food…