Daily Note | January 26, 2024 | Mission Accomplished?

Markets are finishing the week on a positive note extending the weekly gains though MegaCap Tech is mostly lower. Microsoft overtook Apple as the world's largest company, briefly. Bond yields are flattish and remain at their slightly elevated level.

With inflation down and GDP still strong, the no-landing crowd certainly has trash talking advantage at the moment. The GDP print, which came in 130 bps above expectations, was primarily due to significant inventory build which tends to be a pull-forward from future quarters. That just means the next few quarters could be below trend. That also doesn't mean a recession by itself.

Inflation is now down to the 2.0% target according to PCE and we could see rate cuts in a period of relative prosperity (at least according to markets and GDP). That is something we haven't really ever seen but, given the distortions from the pandemic, not a big surprise.