Perspectives

The job market was surprisingly strong in May, with non-farm payrolls growing 172,000, beating even the strongest forecasts for the month. As a result, the futures market is now pricing in a quarter-point rate hike later this year and, more likely than not, another quarter-point rate hike sometime in 2027. But we think a rate hike would be ill-advised and unlikely. First, this is a good employment report, but not a “barnburner.” Barnburner job growth is 300,000 to 400,000 per month. Even Ke… View More

Loud Headlines, Intact Fundamentals   It was a loud few days. On Friday, the Nasdaq Composite fell 4.18% — its worst single day since April 2025 — as a violent selloff in semiconductor and AI-related shares dragged the major indexes lower, with the Philadelphia Semiconductor Index down 10.26%, its steepest drop since March 2020. Over the weekend, the conflict in the Middle East escalated again, and South Korea’s market, heavily concentrated in memory chips, opened sharply lower to start… View More

A Strong Jobs Report, an AI-Led Selloff, and What the Evidence Actually Says   In our June monthly commentary we flagged June 5 as the date to watch for the wage-and-jobs leg of the cycle. It arrived today, and the market’s response pulled two of our running threads into a single, unusually sharp session. The May employment report came in far stronger than expected, Treasury yields jumped, and equities sold off hard — led almost entirely by the artificial-intelligence and semiconductor na… View More

The doom-and-gloom narrative around the U.S. economy is loud, but the data continues to tell a different story. Markets just delivered an eighth consecutive weekly gain, with the S&P 500 closing Friday at 7,473.47, the Dow at a record 50,579.70, and the Nasdaq at 26,343.97.1 The market has, in effect, fully looked through the impact of the war with Iran. As we have said in prior weeks, when the headlines and the data disagree, we follow the data. The most recent data is, frankly, better tha… View More

To say the least, since its inception in 1913, the Federal Reserve has had its ups and downs. One thing most people don’t know is that, prior to the invention of the Fed, other than during wars, there was almost no inflation. Various sources , including the Federal Reserve regional banks, show that the purchasing power of $1 in 1900 was the same as or higher than it was in 1800. The Government did print and borrow money during wartime, which caused inflation during the War of 1812 and the Civ… View More

With roughly 60% of S&P 500 companies having reported, earnings growth estimates have climbed to 27.8%—nearly double the 14.4% expected at the start of the quarter. While mega-cap companies have delivered particularly strong results, growth expectations have improved across every sector except energy. This marks the sixth consecutive quarter of double-digit earnings growth. Equally notable, revenue growth is now exceeding 10%, with broad-based strength across sectors. 2026 full-year earni… View More

The federal government is still on an unsustainable fiscal path, with the national debt reaching $39 trillion in March and poised to rise further in the years ahead as we keep running budget deficits. However, beneath the headlines, both revenue and spending trends have shifted in a positive direction. Its possible investors are recognizing this, which may be helping buoy stock markets. On the tax front, yes, the Big Beautiful Bill enacted last year made permanent many of the temporary tax chan… View More

Given sector performance in the first quarter, most people would not be surprised to learn that Energy and Materials were two of the top three contributors to forward upward earnings revisions. What might be surprising is that expectations for NTM earnings in the Tech sector are up by more than 18%, even though the sector's total return was down 9.1% in the first quarter. Multiples for the sector at 23.2x are meaningfully lower than the Industrials and Consumer Discretionary sectors at 25.8x and… View More

Strategas’ Common Man CPI popped in March amid the energy shock resulting from the U.S war with Iran. As a reminder, the Common Man CPI (CMCPI) consists only of the components people must buy – Food, Energy, Shelter, Insurance, and Children’s clothing. Essentially, it is a “core” measure of inflation in the way a consumer, rather than an economist, would think of it. While the move in our measure m/m was lower than the 0.9% m/m increase of the headline CPI, consumers remain pressured … View More

In 2024, Republicans swept the White House, the Senate, and the House, allowing them to make the Trump tax cuts permanent. But the clock is ticking on their congressional majorities. At this point, we think the odds are very high that the Democrats will win back the House in the midterm election in November. Compared to 2024, the Democrats only need to gain three seats to take back the House. Historically, the party not in control of the White House – this cycle, the Democrats – have gained… View More