Many people are wondering why the stock market is moving higher over the last couple of months. If you read the headlines on your news feed it's mostly doom and gloom. However, if you look at the chart below you can see that earnings for S&P 500 companies dropped in 2022 but are expected to remain flat in 2023 and then grow substantially in 2024 and 2025. If this is the beginning of a new bull market then the improving outlook on earnings is probably why. It should be noted that the market tends to look forward, not backwards and if people believe earnings are going to grow then the stocks that represent those earnings usually grow with them.

 

 

Is inflation finally under control?

 

The Producers Price Index came out on Wednesday and was -0.3% month over month and 1.1% year-over-year. These numbers were much lower than expected and definitely set the stage for inflation to appear under control, at least for the short term.

 

These numbers may have also impacted the Federal Reserve's decision to pause on raising rates higher on Wednesday. This may not be the end but maybe it’s the beginning of the end!

 

I've also included a piece from our CIBC Economics Team entitled "What would an A,I, Central bank do?".

 

As always, if you have any questions please feel free to give us a call at any time.

 

Have a great weekend.

 

Milan