Daily Brief - ☀️ Where to invest after CPI

TLDR: Core CPI is stabilizing and the hiking cycle is dead. Treasuries look good but risk parity could be your best choice.

Inflation excluding food & energy has dropped nicely from 4.7% in July to 4.3% in August. If it stabilizes around 4% annual, then the hiking cycle is well and truly defunct.

At this point it appears evident there will be no hike in Sep, and nothing warrants further hikes afterwards. But we can’t ignore that growth is healthy and inflation mid-digits, which is to say: don’t get your hopes up for rate cuts, short of a recession.

So where to invest?

We find ourselves in a situation where growth stocks are extremely expensive, whereas there’s a wealth of cheaper higher-yielding stocks out there. It’s entirely possible that the best portfolio for this last portion of the cycle is a nice risk-parity mix of treasuries and cheap/yielding stocks. More on this tomorrow!

Picture above is unrelated, we just like to poke fun at Apple. In fact, here’s another one:

What's happening in the markets?

This section is powered by Open AI connected to TOGGLE AI

In the financial markets, there were minor fluctuations observed in stocks, bonds, and the US dollar, as a mixed inflation report added to the ongoing speculation about the Federal Reserve's rate hike plans.

While the report today may have disappointed those hoping for a more pronounced cooling of inflation, it should be noted that the figures largely aligned with expectations. This outcome could be viewed as a modest victory, given the persistently high oil prices and the robust recent economic data.

Additionally, several megacap stocks experienced gains, notably as the leaders of five out of the top 10 largest US companies convened in a closed-door Senate meeting to influence the regulatory framework for artificial intelligence.

In a separate development, Arm Holdings Plc successfully priced its initial public offering at $51 per share, resulting in a valuation of approximately $54.5 billion, marking it as the largest IPO of the year.

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Earnings Update: Copart reports tonight

Last quarter the automotive-reseller services provider beat EPS by $0.04, which was followed by a 7.77% increase in the share price the next day.

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.

Asset Spotlight: JPMorgan ⬇️ Goldman Sachs ⬇️

Toggle analyzed 6 similar occasions in the past where JPMorgan stock dropped and historically this led to a median decrease in the Goldman Sachs stock price over the next 1M. Read full insight!

General Interest: Third book of the week: Isaacson on the troll

We pulled a sneaky on ya, to quote internet saint Bob Ross. This week we have a hat trick of books for you.

Yesterday we covered The Good Life, the day before Tyranny, Inc., today we cover Isacsoon’s door stopper on Musk.

Musk’s figure looms large - much larger in fact that Isaacson’s previous big target, Steve Jobs. And just like Jobs’ bio, this work on Musk is worth reading for reasons that transcend the individual - because through the individual, the book captures the zeitgeist of a specific period.

If Jobs’ bio told a story of early tech from the 70s to the launch of the iphone, Musk’s bio tells the birth and aging of Big Tech: from Paypal to Tesla, from Twitter to OpenAI.

The PR machine is on a rampage for the launch of the book. We recommend you check out the WSJ piece and Isaacson’s own Lunch with the FT to get some balanced commentary.