5/26 – 5/30 Red Rock Update
Building Wealth in the Secular Bull Market to 2036
Stocks peak about every 36 years, most recently in 1929, 1965, and 2000. This 36-year cycle can be traced all the way back to the earliest eras in recorded human history, back to Pythagoras and Plato and the Axial Age around 600BC. After each peak comes a period of decline (punctuated by bear market rallies) that typically lasts 16 years or so. Then, with the excesses of the prior bull period wrung out and investors most depressed, the next 20-year run to the next market top can begin. We're in that Golden Age now – take advantage of it!
Howdy, Bull-Riders:
This morning's Personal Consumption Expenditures Index (PCE), the Federal Reserve's favorite inflation gauge, showed price increases slowed in April, but inflation remained above the Fed's 2% target. April was the first month in which a large portion of President Trump's tariffs were in effect. The headline PCE increased 2.1% year-over-year, below the 2.2% economists had expected, and 0.1% month-over-month.
The core PCE excluding food and energy costs rose 2.5% year-over-year, in line with expectations and lower than March's 2.7%. Monthly core prices rose 0.1% in April, in line with expectations and the same as March.
h/t Yahoo Finance
I doubt this affects the Fed's interest rate decision on June 18 – they need to get more clarity on how the tariffs will affect inflation.
The second estimate of March quarter real GDP growth on Thursday morning was little changed on the surface, down 0.2% instead of the initial estimate of down 0.3%. But under the hood, the positive difference seemed to be inventory investments to beat President Trump's tariffs. Personal consumption growth was revised down from +1.8% to +1.2%. That's a relatively big revision in this series and probably means the economy is a little weaker than we thought.
Market Outlook
The S&P 500 added 1.2% since last Thursday in this holiday-shortened week. The Index is up 0.5% year-to-date. The Nasdaq Composite gained 1.3% as Nvidia came through - again. It is still down 0.7% for the year, though. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 1.8%. It is down 10.6% year-to-date. The small-cap Russell 2000 booked a 1.3% gain but is down 7.0% in 2025.
The fractal dimension added to its already fully consolidated position. We might see more of this wishy-washy action, but the next leg up could start anytime.
Economy
The Atlanta Fed's GDPNow model estimate for June quarter real GDP slipped two-tenths to +2.2% due to weaker private domestic investment growth.
Dollar Death Watch
The dollar has been slipping, which lends strength to stocks.
h/t St. Louis Fed
But traders are too bearish to think the downtrend can continue in the near term.
h/t Bloomberg
Below The Paywall This Week
* * the size of the ecosystem has nearly tripled
* * AI inference token generation has surged tenfold in just one year
* * a great interview at the Economic Club of Chicago
* * bringing ways to increase sales for companies
* * AI and machine learning are the future
* * material untouched since the dawn of the Solar System
* * strengthens their position as a provider of end-to-end national security space solutions
* * positive topline results from its second Phase 3 clinical trial
* * oil demand is picking up and could surprise us
* * franchise that will serve shareholders for years to come
* * The goal is to quadruple US nuclear power production over the next 25 years
* * higher temperatures driving demand for air conditioning
* * Better a consolidation due to time than one due to a sharp drop in price, because
* * a buy for much higher gold prices
* * firmly bid above
* * remains the cheapest and easiest way to buy
* * remains the cheapest and easiest way to buy
Coming Events for Free Subscribers
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Friday, June 6
May payrolls - 8:30am
Golden Age Portfolio Update
This was a very good week for the portfolio as it jumped 3.4%. We're now up 11.4% in 2025 and 99.9% since inception, with much more to come. Let's dig in...
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