Takeaways that really matter in financial markets now: FED rates, semiconductors, global economy, US investors portfolios data and etc.

How is with the FED rates policy? How financial markets shift sentiment for FED rates during May?

Semiconductors data shows economic growth slowdown and potentialy over-hype of AI base market trends.

Why UK inflation so high?

Markets are currently anticipating limited room for policy rate reductions in the coming months. Analyzing the Fed funds futures contracts for June, September, and December 2023 reveals a notable shift in expectations. There is now a higher likelihood of interest rates increasing between the present time and September. Additionally, the market is only factoring in a decrease of approximately 35 basis points in the remaining months of this year. This stands in contrast to the situation just a month ago, when a reduction of around 50 basis points had been taken into account between June and December (refer to chart 1 below). The diminishing concerns regarding a crisis in the US regional banking sector likely contribute to these revised outlooks.

At the moment we see lots of hype for the AI and also semiconductors industry again. But if you take a look at the semiconductor inventories, that shows stalling economic growth pattern. Surging demand for electronics (e.g. semiconductors) from global lockdown phases generated a surge in activity in these economies in late 2020 and much of 2021, a surge which has now moved into reverse. Inventory to shipments ratio:

Why inflation in UK is still such high? There is one of the main reasons: energy prices:

Hard/Soft and crash landings in history:

Current Fed estimates call for a two-quarter, soft landing recession that begins at the end of this year. Whats about such situations in history? Historic precedents include 1970-71, 1960-61 and the early 2000s downturn after the tech bubble popped.??

As for crash landings, the pandemic episode of 2020 is in a class by itself. Perhaps unsurprisingly, the GFC was second worst.

Crazy about US stock market investors.US consumers bearish, but still buy stocks:). Historically, as the US consumer became bearish, individual investors pulled money from the stock market. That relationship has broken down:

This visualisation tracks the results of a survey by the American Association of Individual Investors (AAII), which measures the proportion of portfolios that are positioned in stocks. The divergence with the University of Michigan’s consumer sentiment index began in 2020 – a year that saw the pandemic hammer the economy while tech stocks surged.?

So how is with recession: is it priced in? It doesn't look like: As consumer sentiment remains in the doldrums, the AAII says its members continue to position more than 60 percent of their portfolios in stocks.?