It was expected. Three-fourths of the increase came from gasoline. Core inflation is still relatively tame. The Fed wants to see core come down. The question is how it feeds into core over time.

This isn't 2022; we don't have the same fiscal stimulus. If consumers spend more at the pump and on food, it takes away from other categories, potentially easing core inflation and slowing growth, which keeps the Fed in check.

I'm more optimistic. Shelter pressure should ease, core goods from tariffs should slow. Higher headline inflation could cut into core by squeezing consumer budgets.

Mechanical higher shelter prices next couple months, then downward pressure. Less immigration means less upward rent pressure.

Elevated tax refunds should buffer the consumer. If the consumer struggles, we'll probably get more fiscal stimulus in a midterm election year. Our growth forecast hasn't changed much.

Oil changes the shape of inflation, not the trajectory. We still see trend or slightly below-trend growth.

AI displacement fears played out early in the year. Sentiment is key; people are looking for reasons to take a breather after three years of double-digit returns.

Mag7 valuations down from 29x to 24x, fundamentals solid with 25% earnings growth. Software economics may change from per-head to compute cost.

We're not at the start of a new cycle. Small-cap has sky-high profit expectations that often undershoot. It's more a sentiment rotation to unloved areas than a durable trend.

Energy was up 25% before the war. It's about going to places we haven't been in recent years.