INTRADAY ALERT: April Core PCE tame at +0.25% MoM. Supports post-PCE rallies = buy this dip

INTRADAY ALERT: April Core PCE tame at +0.25% MoM.  Supports post-PCE rallies = buy this dip

INTRADAY ALERT: April Core PCE tame at +0.25% MoM.  Supports post-PCE rallies = buy this dip
INTRADAY ALERT: April Core PCE tame at +0.25% MoM.  Supports post-PCE rallies = buy this dip
INTRADAY ALERT: April Core PCE tame at +0.25% MoM.  Supports post-PCE rallies = buy this dip

THIS INTRADAY ALERT IS SENT SOLELY TO CLIENTS OF FS INSIGHT

April Core PCE released this am and came inline at +0.25% MoM. This is the best core PCE MoM for all of 2024 and supportive of the notion that inflation pressures are ebbing. The overall details are also better than the Core PCE result itself:

  • The two largest contributions to inflation in April Core PCE were:
    – Housing +0.07% CTG (cont to growth) vs +0.08% last month
    – Financial Services +0.06% CTG vs +0.03% last month
  • Similar to CPI, “personal care and clothing services” and “clothing” exploded, with +2.05%/+1.17% MoM, which are annualized rates of +25% and 15%. Are apparel and related services suddenly surging? Not in our opinion.
  • Is this improvement repeatable? We believe these improvements are sustainable. Housing is decelerating at a steady pace and converging on the market-based measures, which are not showing +6% YoY growth rates.
  • Core PCE ex-housing grew +0.22% MoM, down from +0.31% MoM in March. And the YoY has been dripping lower to 2.15% vs 2.19% YoY in March. So, outside of housing, PCE inflation is on target.

Bottom line: We noted stocks generally perform well post-PCE release.

Stocks have been under pressure for the past 10 days or so, especially when looking at the equal weight indices. For the past 18 months, stocks fare better post-PCE release (5D post).

  • But as noted earlier, the S&P 500 is -1% into this core PCE release.
  • Since end of 2022:
    – S&P 500 down -5D into PCE 4 times
    – 4 of 4 times, S&P 500 gained +5D later
    – 2/24/23: +0.8%
    – 5/26/23: +3.0%
    – 9/23/23: +0.2%
    – 10/27/23: +5.3%
  • Thus, we see high probability that stocks perform well into next week’s May jobs report (Friday, June 7).

INTRADAY ALERT: April Core PCE tame at +0.25% MoM.  Supports post-PCE rallies = buy this dip

INTRADAY ALERT: April Core PCE tame at +0.25% MoM.  Supports post-PCE rallies = buy this dip

INTRADAY ALERT: April Core PCE tame at +0.25% MoM.  Supports post-PCE rallies = buy this dip

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INTRADAY ALERT: April Core PCE tame at +0.25% MoM.  Supports post-PCE rallies = buy this dip

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