Be cautious, consumers could slowdown, warns Stifel's Barry Bannister

Market Outlook - The market reacts significantly to Trump's tweets, but the actual economy is slowing sharply in the second half [1] - Strategists are mostly following what the market is doing, not thinking outside the box with big bold numbers [8] - May to October is a seasonally fraught period, with weakness occurring 60-65% of the time in the last century [9] - There are signs consumers could slow down, as seen in disappointing early Amazon Prime data [10] Inflation and Economic Conditions - Inflation is expected to breach 3% by year-end, based on the core personal consumption expenditure deflator (core PCE) [2] - A soft stagflationary environment with inflation above the 2% target and a slowing economy will affect S&P 500 earnings, including big tech [2] - The market may experience an echo of the stagflationary trades seen in the first four months of the year, though potentially half as bad (around 12% drop instead of over 20%) [3] - Inflation faced easy anniversary comparisons, but six-month annualized data and individual components of core PCE suggest inflation is sticky [5][6] Fed Policy - With a slowing economy and sticky inflation, fewer Fed cuts are expected [10] Potential Market Pullback - The market anticipates some weakness in the second half of the year [9] - A pullback is expected due to a slowing economy, slowing earnings, sticky inflation, and fewer Fed cuts [10]