• The difference between the S&P 500’s earnings yield and BBB-rated corporate bond yield has dropped to -1.9%, the lowest in 15 years. Excluding a brief period in 2009, this is the lowest level in 23 years. The gap has fallen by 4 percentage points over the last 5 years as US interest rates have risen sharply. In other words, less risky investment-grade corporate bonds now pay a higher yield than S&P 500 companies' profits relative to their stock prices. This metric suggests the market may be overvalued.
  
  

  

• While December CPI inflation was 2.9%, inflation is much higher in many necessities:
  
  1. Car Insurance Inflation: 11.3%
  2. Transportation Inflation: 7.3%
  3. Car Repair Inflation: 6.2%
  4. Utility Gas Inflation: 4.9%
  5. Homeowner Inflation: 4.8%
  6. Rent Inflation: 4.3%
  7. Food Away From Home Inflation: 3.6%
  8. Hospital Services Inflation: 3.5%
  
  Headline CPI inflation is at a 5-month-high while core CPI fell, but remains 120 bps above the Fed's target. We have now had 3+ years of compounding inflation in the United States.
  
  
• 30-Year Mortgage Rate jumps to 7.64%, the highest level since May
  
  

  

• Final Words: Markets are at the all time high and fed is cutting interest rate, caution warranted. Below is CNN Greed vs Fear Index, pointing at 'fear'. This maybe a good time to buy ETF such as VOO.
  
  

  

  Below is last week sector performance report.
  
  

  

If you are looking for investment opportunities, you can take a look at our Hidden Gems section, and if you want to see our past performance, visit our Past Performance section. If you are looking for safe and low cost Exchange Traded funds(ETFs), check out our ETF recommendations.

Currrent Shiller PE (see below) is showing overbought conditions as index is far above mean/media and our AryaFin engine is indicating caution. Have a good weekend.