As the chart below illustrates Chairman Powell has been premature in his pivot. Immediately following today’s release of a hotter CPI print, Fed Funds Futures are now pricing in only 22% odds of a June cut, 10 yr yields ripped to the important 4.50% level and equity futures sold off hard (IWM futures off almost 3%). A few details:

• Headline CPI came in at 3.5% vs 3.4% expected and Core came in at 3.8% vs 3.7%

• Inflation is going the wrong way whether you look at the 1-month or 3-month change (as illustrated below, ty Jason Furman)) or the 6-month change which grew at the fastest level since July of last year

• Yes, OER is still contributing to higher inflation readings but the rate of growth is decelerating

• Gas prices are starting to have an impact for sure

• “Supercore” Services ex-housing rose at 4.77% y/y rate which is the fastest since April of last year

• Medical costs, health insurance, home insurance and car insurance are really starting to bite

The bottom line is that, while there are signs of consumer demand weakening and small businesses struggling, the Fed can not seriously tell the American people that they are gaining on their price stability mandate, and they can therefore begin cutting rates. Our view for several quarters has been “Higher for Longer” on both growth and inflations and we remain of that view. That said, we are concerned that the weakness in some of the employment, restaurant traffic and NFIB (small business) data may be telling us that demand weakness could be emerging. The Fed is in a very tough spot. They see the same signs of emerging weakness, but they can not afford to ignore the fact that inflation is accelerating. The last thing we will say is: Now is not the time to incur more risk.

WealthVest makes no representation or warranty, expressed or implied, with respect to the accuracy, reasonableness, or completeness of any of the statements made in this material, including, but not limited to, statements obtained from third parties. Opinions, estimates and projections constitute the current judgment of Tim as of the date indicated. They do not necessarily reflect the views and opinions of WealthVest and are subject to change at any time without notice. WealthVest does not have any responsibility to update this material to account for such changes. There can be no assurance that any trends discussed during this material will continue.

Statements made in this material are not intended to provide, and should not be relied upon for, accounting, legal or tax advice and do not constitute an investment recommendation or investment advice. Investors should make an independent investigation of the information discussed in this material, including consulting their tax, legal, accounting or other advisors about such information. WealthVest does not act for you and is not responsible for providing you with the protections afforded to its clients. This material does not constitute an offer to sell, or the solicitation of an offer to buy, any security, product or service, including interest in any investment product or fund or account managed or advised by WealthVest.

Certain statements made in this material may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such statements. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology.

The S&P 500® is a trademark of Standard & Poor’s Financial Services, LLC and its affiliates and for certain fixed index annuity contracts is licensed for use by the insurance company producer, and the related products are not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC or their affiliates, none of which make any representation regarding the advisability of purchasing such a product. WealthVest is not affiliated with, nor does it have a direct business relationship with Standard & Poors Financial Services, LLC.