In a market that has been driven significantly by momentum and speculation this year, investors still have an eye on what matters in the end. Earnings! And if that focus continues, future earnings forecasts suggest a further broadening of the market is in order.

The key points you should know.

1. The economy continued to grow at a solid pace through the first quarter.

2. The job market remains tight, but perhaps with some signs of slowing.

3. Inflation, while down substantially from a couple of years ago, remains too high.

4. The Federal Reserve still expects to start easing this year, but not yet.

How fast the world can change. Not long ago, in a world of extremely low and even negative interest rates around the globe, stocks flourished as investors claimed “there is no alternative” (the “TINA” acronym) to equities.

By almost any account, the S&P 500 Index year-to-date performance has been incredibly narrow and concentrated. Just seven companies account for the entire 10% return. The other 493 companies combined are delivering a slightly negative return. Stunning.

We have used the word “unprecedented” to talk about the economy during and after COVID.  We have never before locked down economic activity, while printing trillions of new dollars to help finance trillions of extra government borrowing to pay people not to work.  But now, it’s all over…the Federal Reserve has lifted rates, M2 is falling, and we’ve stopped paying people not to work.

History is full of economic and societal collapses.  The Incan and Roman societies disappeared, the Ottoman Empire fell apart, the United Kingdom saw the pound lose its reserve currency status.  So, anyone who says the US, and the dollar, couldn’t face the same fate doesn’t pay attention to history.

China and Russia have announced they, along with Brazil, India and South Africa, are “working to develop a new global reserve currency” to compete with the U.S. dollar.

Countries hostile to the U.S. and others, including China, Russia, Brazil, India, Indonesia, Argentina and South Africa, have been meeting with another to devise ways to dethrone the U.S. dollar as the world’s primary reserve currency. These and other countries are in open revolt against the “financial imperialism” of the U.S.