In mid-May, we received the April Consumer Price Index numbers, which showed inflation running at 3.8% year over year (1), slightly higher than expected.
Much of the recent inflation concern ties to geopolitical tensions in the Middle East and rising energy prices. But historically, those types of shocks tend to be temporary.
Think about it for a moment: when energy prices rise and there’s greater global uncertainty, do consumers typically spend more? Usually, they spend less. Families often redirect more of their discretionary income toward fuel and essential expenses, which reduces spending elsewhere in the economy.
At the same time, inflation has been a long-term issue for decades -- not just during periods of war or elevated oil prices. Data from FRED shows inflation has steadily increased in the U.S. since 1975, including during periods of relative geopolitical stability and lower energy costs (2).
Why? Primarily because governments continue to run large deficits, while central banks remain reluctant to significantly reduce money supply.
For investors, this creates an important reality: over the long run, preserving purchasing power often requires owning risk assets and accepting periodic volatility along the way.
Now, with markets recently reaching new all-time highs, some investors may feel hesitant about putting new capital to work. Historically, true market tops are often driven by excessive optimism and speculative behavior.
But today, over $7.5 trillion -- near record levels -- still sits in money market funds. That doesn’t exactly signal irrational exuberance (3).
In addition, several sectors, including software services and healthcare, have lagged this rally and remain negative year to date. That creates potential opportunities as capital continues searching for areas of value and future growth (4).
As we move into June, I’ll admit the summer heat isn’t exactly my favorite part of the season. But summer also gives many of us the opportunity to travel, recharge, and spend time with family.
Our family is looking forward to a trip to the Great Smoky Mountains in Tennessee, where the temperatures are cooler and the scenery is hard to beat.
As always, thank you for your time, and I look forward to speaking with you again next month.
(1) - Bespoke Report May 15 2026
(2) - U.S. Bureau of Labor Statistics via FRED® https://fred.stlouisfed.org/series/CPIAUCSL
(4) - The Bespoke Report, Pros and Cons, Q2, March 2026, and The Bespoke Report, May 15, 2026