U.S. stocks reach new heights

Market Overview - The upcoming week is expected to be the busiest of the earnings season, with five of the seven mega-cap companies reporting [1] - The Federal Reserve's decision on interest rates is anticipated on Wednesday, alongside a meeting between President Trump and President Xi [1] - The market appears to be reacting positively to a cooler Consumer Price Index (CPI), indicating confidence in the Fed's engagement [1][5] Investment Strategies - There is a strategy to reduce exposure in companies with similar endgames, particularly in cloud and AI sectors, as the market shows resilience [2][3] - Cash positions are being increased to allow for diversification and potential bargain hunting opportunities [6][10] - The market is characterized by a trend where any dip is quickly bought, indicating strong liquidity and investor confidence [12][14] Earnings and Valuations - Positive earnings reports and upward revisions are contributing to a neutral or slightly under-positioned market, suggesting a chase for returns until year-end [7] - Valuation concerns are present, but the current market dynamics are pushing prices higher despite these risks [8][9] - The market is largely ignoring geopolitical tensions and tariff issues due to strong economic performance and earnings [11][19] Inflation and Economic Indicators - Current inflation rates, while above the Fed's target, are not expected to hinder future rate cuts, with some suggesting that 3% inflation could become the new norm [16][17] - Shelter costs, a significant component of CPI, are expected to trend downward, contributing to a deflationary environment despite stimulating economic activity [18][20] - The impact of tariffs is less significant on key goods, allowing the market to maintain momentum [18][19]