Good Thursday morning. This mornings inflation data (core PCE deflator) is known to be the Fed’s preferred inflation gauge and we have more good news, meaning broad disinflation continues to build. The year/year core price index rose 2.8%, which met economist estimates, allaying the fears of many that inflation was making a dangerous comeback. It is not. The really good news came from personal income, which rose a massive 1% on the month, crushing estimates of just .5%.

Our view over the last 2 years has been that the economy is in excellent shape, with personal incomes and productivity rising sharply. The economy is picking up steam, which means corporate earnings will continue to rise, “forcing” stock prices higher. For those that have wondered exactly how it is that the markets can continue to rise at such a fast pace, know this; the markets are a discounting mechanism and as such, they’ve been telegraphing this broad economic strength. The markets…somehow…always know what li...