AFMC - April CPI Inflation Data And Its Impact On Equity Returns
2024-05-15 15:01:28 ET
Summary
- April Consumer Price Index increased 0.3% from March, largely driven by shelter and gasoline prices.
- Given such data, rate cuts in 2024 are unlikely in my view, leading to gloomy projections for major equity indices.
- The very thin Excess CAPE Yield puts severe pressure on equity valuation and creates more downside than upside potential.
- A few alternative tactical investment ideas are suggested, including short-term bonds (not bond ETFs) and energy/oil stocks.
CPI data and rate cuts
U.S. Bureau of Labor Statistics just released the inflation data for April 2024 (see the chart below). The key takeaway for me a re quoted bel ow (the emphasis were added by me):
April CPI Inflation Data And Its Impact On Equity ReturnsApril Consumer Price Index increased 0.3% from March, coming in a tick lower than the +0.4% consensus and easing from the +0.4% pace in the first three months of the year. Combined, shelter and gasoline prices, contributed more than 70% to the monthly increase in the headline number. The energy index increased 1.1% from March, while the food index was unchanged.