There were two excellent articles in Barron’s this weekend, and I recommend reading both. The first article is written by Ben Levisohn, and essentially he notes that while investors may have shrugged off the current inflation scare, concern about inflation is real and will probably resurface in the near future. 

“The stock market faced its inflation fears this past week, and it came away better for it. But investors better make sure they don’t get too complacent,” Levisohn writes. “Inflation, we all know by now, is running hot—and we didn’t need May’s report to confirm it. The consumer-price index rose 5% last month from a year ago, easily topping forecasts for 4.6%. It was the second blowout report in a row, following April’s 4.2% reading, but the market’s reaction was quite different.”

As I’ve mentioned in previous episodes of the Muller Minute, adverse market reactions to inflation fears can create buying opportunities. My hunch is that the market will experience some rocky moments in August, and those might be good times to buy.

The second article, by Lisa Beilfuss, takes a look at consumer sentiment. Despite the rampant sense of uncertainty that many of us are experiencing, consumers appear remarkably optimistic.

“Consumers have the sunniest economic outlook since February 2020 as the economy reopens and unemployment falls, a development that bodes well for near-term economic growth and stock market gains,” Beilfuss writes. “The University of Michigan said its index of consumer sentiment rose to 86.4 in early June, recouping most of May’s loss. The reading topped economists’ estimate of 83.5. The survey’s expectations component jumped to 83.8 from 78.8, also well above the predicted 78.7 and reflecting the highest degree of confidence since the pandemic began.”

Beilfuss notes that “some cloudy forecasts lurk below the surface,” yet the overall takeaway from both articles is that while inflation remains a serious concern, it’s not likely to derail economy.

For a variety of reasons, including the outstanding efforts of the global technology community, the economy is heading in a healthy direction. The recovery is ongoing, and that’s good news for everyone.

As I’ve said and written before, now is unquestionably the best time to be a technology executive.  Collectively, our industry is leading the global economy, and driving markets to new heights. From my perspective, I foresee this trend continuing for several more quarters.

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