Discussion on US CPI data and Federal Reserve policy. Coach owner buys Michael Kors parent in $8.5 billion deal. Increase in Lyme disease in the US. Lower domestic airline prices. Current state of the market and expected higher interest rates.
Read more
AI Summary
AI Chapters
Episode notes
auto_awesome
Podcast summary created with Snipd AI
Quick takeaways
The domestic airline market has experienced lower prices due to increased capacity and lower jet fuel prices, while international fares remain high.
The bond market is sending conflicting signals with an inverted yield curve suggesting a possible recession, but nominal rates have risen, making it challenging to interpret market sentiment.
Deep dives
Airline prices decrease due to increased capacity and lower jet fuel prices
The domestic airline market has seen decreased prices due to increased capacity from airlines. The availability of more seats combined with lower jet fuel prices has contributed to a decrease in fares compared to last year. International fares, however, remain high due to strong demand. Prices to destinations in Asia are up almost 60% compared to pre-pandemic levels. Europe has seen some improvement in prices, but fares are still relatively expensive compared to previous years.
The state of the bond market suggests mixed signals
The bond market is currently signaling conflicting messages. The inversion of the yield curve could indicate an impending recession, but nominal rates have risen on a year-to-date basis. This divergence makes it difficult to interpret the bond market's sentiment. Additionally, the bond market is pricing in expectations of lower inflation and stronger economic growth than what the equity market reflects.
Earnings season results and valuation of the S&P 500
Despite companies beating expectations in earnings season, overall year-over-year earnings growth has not significantly changed. The stock market has not dramatically reacted to the earnings cycle, and the S&P 500's PE multiple of 20 times anticipated 2023 full-year earnings is currently being questioned as to whether it is appropriate given the current economic environment.
Investment recommendations
Based on the outlook for inflation, Clear Harbor Asset Management suggests taking on more duration risk in fixed income by investing in high-grade fixed income assets such as treasuries, mortgage-backed securities, and investment-grade credit. Clear Harbor also believes in diversification within the equity market, but is not currently increasing its targets due to current market valuations.
Nikki Baird, Vice President of Strategy at Aptos Retail and Bloomberg News Economics Editor Molly Smith discuss US CPI data and the outlook for Federal Reserve policy. Bloomberg News US Luxury Retail Reporter Jeannette Neumann and Bloomberg Intelligence Global Luxury Goods Analyst Deborah Aitken report on Coach owner buying Michael Kors parent in $8.5 billion deal. Nicole Baumgarth, Professor of Molecular Microbiology and Immunology at the Johns Hopkins Bloomberg School of Public Health, looks at the increase in Lyme disease in the US. Hayley Berg, Lead Economist at Hopper, talks about what’s driving lower domestic airline prices. And we Drive to the Close with Aaron Kennon, CEO at Clear Harbor Asset Management. Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan.