I don't see tariffs as being a major driver of inflation. Uh, you know, and I went through a lot I went through this in in in a lot of detail in my speech this morning about why I don't see that being the case. And I've been consistent about that being the case.Now, you might think that if I don't think that tariffs are driving inflation higher, then core goods will stay high for a long period of time, and that would be a problem if I wanted to cut rates. But I see so much disinflation in the pipeline becau ...

Macroeconomic Shift - The research indicates a shift from a debt deflation mindset, prevalent since the 2008-2009 Great Financial Crisis (GFC), to a currency debasement mindset marked by large procyclical fiscal deficits [1] - The debasement mindset prioritizes protecting purchasing power against asset and monetary debasement, and asset inflation [1] - The research suggests this shift is a secular change lasting over a decade, with investors gradually recognizing its implications [1] Investment Strategy - The research favors equities, gold, Bitcoin, and real estate as preferred assets in the debasement era, viewing them as inflation hedges [1] - Dips in these assets are expected to be short-lived as investors prioritize protecting purchasing power [1] - Equities are considered inflation hedges because S&P earnings have generally tracked above inflation over the past couple of decades [1] - The S&P 500 is projected to reach 7,000 by 2026, based on anticipated earnings, margins, and reasonable multiples on sales and earnings [1] Bond Market - The research suggests bonds will have a place in portfolios, offering valuable diversification [1][6] - A cyclical period of disinflation is expected, driven by factors like weaker oil prices, a softening labor market, and lower shelter inflation [1][8] - The Federal Reserve's rate cuts are anticipated to influence bond yields, with potential for a bull steepening in the yield curve [1][10] Labor Market - The research suggests the weakening labor statistics may be both cyclical and structural, influenced by technology innovation like AI [1][25] - Immigration trends impact the labor market, affecting the break-even rate for job creation needed to maintain a constant unemployment rate [1][47] - The research describes a "malignant stasis" in the labor market, where the unemployment rate may not rise significantly, but underlying conditions could be fragile [1][50] Gold and Bitcoin - The fund is overweight both gold and Bitcoin, viewing them as positive assets in the debasement world [1][55] - Gold is expected to continue its secular bull market, with violent moves higher and longer-lasting trends than anticipated [1][58] - A rotation back into Bitcoin relative to gold is anticipated towards the year-end or in the next six months [1][60]

Housing Market & Disinflation - Housing inventory is at its highest level since 2020, indicating a potential slowdown in demand [3] - Home prices experienced a decrease last month, marking the first decline since January 2023 [4] - John Hancock believes housing disinflation will influence economic data, potentially leading the Fed to cut rates more than anticipated [4] Inflation & Tariffs - The analysis suggests that disinflation, particularly in the service-based economy, might offset the potential inflationary effects of tariffs [6] - Markets are overly focused on potential inflationary impacts of tariffs, while underlying disinflationary trends are being overlooked [2][5] Labor Market & Economic Growth - Initial claims are being closely monitored as indicators of potential cracks in the labor market, with a level approaching 260 signaling a more significant deceleration in growth [7][8] - Economic indicators, such as PMI data, suggest a slowing economy, and leading economic indicators have rolled back over [13] - While a recession is not anticipated, a gradual deceleration in growth is expected, with consumer spending showing signs of pullback [12] Fed Policy & Market Expectations - The Fed may be behind the curve in recognizing disinflationary data, similar to the market's oversight [10] - The bond market is pricing in only one to two rate cuts this year, which is viewed as inconsistent with current economic dynamics [10] - There's a possibility the Fed is already too late in adjusting its policies, potentially leading to more rate cuts than currently expected [9][10] Investment Strategy - John Hancock recommends locking in elevated income through high-quality bonds, given elevated bond yields [8] - The recommended investment strategy for the remainder of 2025 is to focus on income generation through high-quality bonds and dividend-paying stocks [14]

Fed's Monetary Policy Stance - The Fed is likely to maintain a vigilant stance and signal patience before cutting rates, potentially disappointing some [2][3] - The Fed is in a "wait and see" mode, hoping for further disinflation but remaining vigilant [2][3] - The Fed is unlikely to cut rates in the upcoming meetings [2] - The Fed needs to be cautious this year, given the impact of oil prices on headline inflation and the need to prevent spillover into core inflation [6] Inflation and Rate Cut Considerations - Cutting rates is not feasible with inflation at 3.8% [3] - The Fed is on guard against signaling a rush to cut rates, considering problematic short-term inflation expectations [4] - A "good rate cut" (due to easing inflation rather than economic weakness) would be desirable [7] - Achieving a "good rate cut" this year is unlikely due to persistent risks; greater clarity and continued disinflation are needed, possibly next year [8] - The Fed should not overemphasize recent good inflation news, as past patterns have been unfavorable [10] - The Fed was late in addressing the previous inflation surge [11] External Factors and Uncertainty - Geopolitical risks, such as the Straits of Hormuz situation, need to be considered [4][5] - Uncertainties surrounding tariffs, oil impact, and immigration reform add complexity to the Fed's decision-making [8]