Republic Risk: Pouring Gasoline on a Gasoline Fire

The CPI figure increased 3.2% annually, which is still much higher than the Fed's 2% target. Why doesn't anyone care? Because of the Fed's next move.

Equity Storm Watch Is GREEN on the S&P 500 and GREEN on the Russell 2000

We’re back at new highs, and the market just keeps chugging higher thanks to strong global liquidity, expectations around financial repression (the topic of today’s Postcards), and expectations for rate cuts. This morning’s CPI figure came in around expectations at 3.2% - but we’re still nowhere closer to the Fed’s 2% target. Markets aren’t reacting yet to the prospect of no rate cut in June, and there isn’t any serious threat to liquidity at the moment. But I’m digging deeper into the $5 trillion cliff we face next year. We’re probably not facing a threat of any serious correction (down 8% to 10%) in this market until that June Fed meeting - as that’s historically a period where market volumes begin to decline heading into the summer.

Dear Fellow Expat:

I did something hazardous to my health.

No. I didn’t swallow a gallon of wine. No, I didn’t jump out of the sky.

I read President Biden’s proposed budget yesterday.…