Stocks closed higher yesterday, this time led by the small-cap Russell 2000 with a gain of 1.59%, followed by the mid-cap S&P 400 with 1.23%. The Nasdaq and S&P 500 were up 0.81% and 0.58% respectively.

No new news on tariffs yesterday. That also goes for the 50% steel tariffs proposed by President Trump last week that are expected to go into effect today (June 4^th).

President Trump and President Xi of China are expected to talk on the phone this week about tariffs and trade.

In other news, E.U. inflation in May eased to 1.9%, down from April's 2.2%, and below the consensus for 2.0%.

Falling inflation around the globe seems to be the narrative lately. While still too high in most places, inflation readings have been defying worries (especially from the Fed) that inflation would rise given the increase in tariffs.

The E.U. inflation report comes on the heels of last week's PCE inflation report in the U.S. (the Fed's preferred inflation gauge), which showed headline inflation easing to 2.1% y/y vs. last month's 2.3%, while core inflation (ex-food & energy) ticked down to 2.5% vs. last month's 2.7%.

There have been worries over the economy as well. Especially after Q1 GDP came in at -0.2%.

But yesterday's growth forecast by the Organization for Economic Development (OECD) put U.S. growth at 1.6% this year. Granted, that was down from their previous forecast of 2.2%, and they cited tariff and policy uncertainty as their biggest reasons why, but their forecast for growth defies concerns for a recession.

I had remarked previously that Q1 GDP was skewed due to a rush of imports into the U.S. to beat the increase in tariffs. (An increase in imports vs. exports can depress GDP numbers.) But core GDP was up, the private sector showed a surge in business investment, and final sales to private domestic purchasers (a closely watched barometer of business and consumer health) grew by 3%, which was an even faster pace than Q4's 2.9%, when overall GDP came in at 2.4%.

The point is, the calls for higher inflation have, so far, not materialized. In fact, they've actually gone down. And the calls for recession also appear to be misguided.

We'll get another look at the U.S. economy on Friday with the Employment Situation report. The last couple of reports have come in better-than-expected and shows the labor market remains strong. We'll see if that trend continues.

In the meantime, today we'll get MBA Mortgage Applications, the ADP Employment Report, the PMI Composite report, and the ISM Services Index.

Stocks are looking good this week. And YTD with both the S&P and Nasdaq in the plus column for the year with 1.51% and 0.46%. And can you believe the S&P is only 2.83% away from hitting new all-time highs? And just 3.84% for the Nasdaq?

That shows the resilience of the economy and the market.

See you tomorrow,