Burrows Capital Investment Strategy Group (BCIS)

Today's recap has been posted. Find it here: https://lnkd.in/ex8Pqkwh

Merz might pull it off and get spending on infrastructure and the environment (stimulus) through whilst getting defense spending (including aid to Ukraine) outside the debt brake. Bunds seem to think the chances are high.

Michael M. Terry, CFA— "The known unknowns are increasing, and watch your allocations." In yesterday's episode of The Wednesday Call, BCIS discussed recent developments surrounding tariff policy, the growing fears of stagflation, and the European market landscape. Listen to the full episode here: https://lnkd.in/eYhKg-Yr

ADP payrolls came in weak this morning with the private sector adding only 77,000 jobs in February, a significant revision down from the estimate of 148,000. Of note is the switch from services to goods production. The data comes alongside similarly weak prints of Jan. consumer spending, and a downward revision to the Atlanta Fed's GDPNow forecast from 2.3% to -1.5% then again to -2.8% annualized GDP growth. For more on this, see Episode 6 of "The Wednesday Call with BCIS", up later today wherever you get your podcasts.

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📢 NEW: What's The Buzz – Inflation Update! 📊 Inflation remains a hot topic as the Federal Reserve navigates rate adjustments. In our latest What's The Buzz piece, Michael M. Terry, CFA, breaks down key economic indicators, market expectations, and what they mean for investors. 🔎 Key Takeaways: CPI has ticked up since its September 2024 low, with January’s reading at 3%—above the Fed’s 2% target. Sticky price inflation is declining, but flexible price inflation is on the rise, signaling potential challenges ahead. PCE, the Fed’s preferred inflation measure, has also stalled in progress—a key factor for rate decisions. Market expectations from TIPS & inflation swaps suggest inflation could remain elevated, affecting fixed income and equity markets. What does this mean for your portfolio? Investors should stay informed on inflation trends as they shape Federal Reserve policy, interest rates, and market dynamics. 📖 Read the full analysis now! https://lnkd.in/gEZy8Ygn #BurrowsCapital #WhatsTheBuzz #Inflation #MarketTrends #Investing #FinancialInsights #WealthManagement

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Dec Fed Funds futures have fallen 25bps since their highs this month (Feb 11). Investors increasingly wagering on more cuts and sooner. This seems more related to signs of a softer economy and is somewhat ignoring stickier inflation (or at least inflation that seems resilient above the Fed's target). PCE should provide some clarity this week.

Consumers threw in the towel in January, obviously trying to get some breathing room from the massive increase in the debt pile we saw for December. A continuation of this trend will obviously not be good for an economy that relies on its citizens to spend. Rates are lower on the news, equities treading water.

CPI came in hot, helping confirm the trend of higher prices. This, of course, is driving asset prices lower. The print has followed increases in breakevens, increases in inflation swaps, and uncertainty regarding the Fed. This is before any tariffs go into effect. Looks like rates got over their skis.