Daily Commentary

MarketMinder’s View: The New York Fed’s May Survey of Consumer Expectations showed “the share of [respondents] seeing their current situation as ‘much worse’ than a year ago leaped to 13.3%, up about 2.7 percentage points from April and the highest since July 2022.” That is in line with other sentiment gauges, which have deteriorated due to the Iran war’s effect on prices—especially those at the pump. But while respondents’ concern over their “current situation” worsened, their outlook for prices wasn’t as dire: “Inflation expectations at the one-year horizon declined just 0.1 percentage point, to 3.5%. The outlook at the three- and five-year time frames held flat at 3.1% and 3%, respectively.” That mirrors last month’s reading, and as we wrote then, it is impossible to know why. Maybe people are observing global oil prices’ continued cooling from early April’s highs (per FactSet). Maybe they trust businesses are adapting. Whatever the reasons, remember that sentiment gauges are, at best, coincident indicators—they tell you what just happened and hold little insight about what consumers will do in the future. Need evidence of that? Consider: “The net between those seeing better versus worse conditions hit its lowest since October 2022, the New York Fed said in the release.” Want to know what else hit a low in October 2022? Stocks. Then they zoomed higher.

MarketMinder’s View: “The US money-market industry now holds a record $8.29 trillion — almost twice the size of Japan’s economy — after inflows topped $1 trillion last year, according to Crane Data LLC, which tracks the industry. The strategy’s popularity has been accompanied by a Wall Street catchphrase, ‘T-bill and chill,’ which has come to signify investors’ preference for the short-term Treasuries these funds often hold.” To the extent that statement actually reflects investors stockpiling cash, which the first roughly two-thirds of this piece suggests is the case, it could be a sign of people making a vast mistake. Money-market fund rates may be higher than in the 2010s, but that doesn’t make the return good. For one, inflation is currently running at 3.8% based on the US CPI—and has annualized 4.5% in the past five years. Is that exaggerated by 2022? Yes. Likely to repeat? No. But it does highlight how inflation erodes money market returns and often leaves you with little to nothing. The notion that stocks are too high and assured to see poor returns ahead is a forecast, one that is tremendously uncertain and amounts to market timing based on past movement and widely known perceptions about the environment today. But the last third of this piece raises another point: Is the money market boom really a market call? People often see these data and presume it is cash parked on the sidelines, but many times it isn’t that at all and amounts to corporations and individuals holding increased cash for reasons tied to expenses (or inflation, as the figures are nominal). This is why those long expecting this “wall of cash” to boost stocks have been disappointed.

MarketMinder’s View: Can you combine two misperceived takes to reach a sensible conclusion? That is the question we pondered after perusing this coverage of Canada’s May jobs report, which showed employment boomed higher, offsetting almost all the jobs shed earlier this year, with gains broad-based and focused on full-time workers. The article casts this good news as a signal that Canada’s economy isn’t as weak as two straight quarterly headline GDP contractions—which some dub a “technical recession”—suggest. We agree with that take on Canada’s economy. Claiming it is in a recession overlooks the fact that the Q1 2026 decline was chiefly centered in government spending and tied to rising imports, which the math of GDP treats as a negative to offset consumption. But labor market data are late-lagging, with major shifts coming long after growth trends change. So while we think that handwringing over prior declines in employment and GDP is overdone, we wouldn’t hang our hat on one jobs report to show why. Furthermore, the S&P TSX is up 10.6% year to date (in USD), edging past the world’s 10.5%—and that follows its huge 38.2% last year, which vastly outperformed the world (source: FactSet). Stocks are leading economic indicators. If Canada’s economy were truly in or about to enter a recession—or were in one before—you would ordinarily see markets pre-price that by falling for a prolonged period. That is absent.