Jack Janasiewicz and Brian Hess discuss the March CPI print, the outlook for interest rates, growth, earnings, and current positioning in the Natixis model portfolios.
- Another month and more new all-time market highs.
- A broad rotation continues and this is healthy for the broader markets.
- While the March CPI print came in hotter than expected, the path to 2% inflation was never going to be smooth.
- There are many differences between the Consumer Price Index and the Personal Consumption Expenditures Price Index (PCE) favored by the Federal Reserve. We wouldn’t be shocked to learn that the next PCE looks more benign than the story implied by the CPI.
- Are rate cuts completely off the table? Not yet. Two to three cuts are still in play for the full year.
- But we’re also seeing continued signs of higher productivity – doing more with less. And this helps with corporate profit margins.
- When and how much the Fed cuts matters little as growth remains robust, labor markets are strong, real incomes continue to grow, and inflation continues to normalize.
- We’ve said it before, and we’ll say it again: That’s pretty bullish.
- Based on this positive macro outlook, the Natixis model portfolios are positioned in a pro-risk fashion, overweight equities and underweight fixed income across our model sets.