Most important take away

April CPI printed 3.8% YoY (hotter than 3.7% expected) and inflation is expected to average above 4.2% in Q2 as Strait of Hormuz disruption isn’t yet priced in. Ed Yardeni stays bullish on equities — earnings are the pillar, big tech leads, small/mid caps are perking up, and financials look attractive — while Moody’s Mark Pinto says private credit asset quality is deteriorating at the margin but not yet a 2007-style crisis. Position accordingly: stay long quality equities and selective financials, fade duration, scrutinize private credit liquidity (especially non-traded BDCs).

Summary

Four interview segments with concrete investment angles.

1) Constance Hunter — CPI and Latin America. April CPI 3.8% YoY, well above the prior 3.3%. She expects Q2 average above 4.2%. Strait of Hormuz closure looks to persist through summer and is not properly priced into inflation or equities. Households have spent $28B extra on gasoline since the war started ($260/household), a dead-weight loss that should reduce demand elsewhere. Watch transportation services at 4.3% — that’s the canary for demand destruction. Shelter at 3.3% should normalize toward 2.9-3.0%. She expects the Fed to move to a neutral bias at the next meeting (drop easing bias) but not hike.

Actionable from Hunter:

• Latin America: relatively shielded from Middle East energy shock, produces agricultural commodities — Brazil doing better than Argentina. Argentine economy under Milei has weak Q1 GDP; deregulation thesis intact but not a straight line up. Consider Brazilian equity/commodity exposure as a relative beneficiary.
• “Salient prices” (gasoline, food) drive political pressure heading into summer travel — expect political/policy volatility.

2) Ed Yardeni — Equities. Classic “wall of worry” bull market call. Earnings are the engine. Mag 7 leading again, but breadth is improving: S&P earnings breadth up, and small/mid cap earnings are perking up after a 2022-onward coma with record-high earnings outlooks for the S&P caps.

Actionable from Yardeni:

• Stay long big tech / Mag 7 — earnings story remains “fantastic.” Amazon boosting consumer discretionary; Google and Meta dominating communication services.
• Financials still have upside: private credit stress appears to be peaking rather than worsening, supportive for the sector as the economy continues to grow.
• Small/mid caps: he sees prospects perking up — consider exposure for participation in next leg of the rally.
• Treat geopolitical crises as buying opportunities — pattern recognition from March bottom on Iran fears.

3) Mark Pinto (Moody’s) — Private Credit. Quality is deteriorating but not catastrophically. KKR markdown referenced. The recent stress was a liquidity test in non-traded BDCs, not a credit-quality test. Investors got requests for redemption that weren’t all granted (the quarterly liquidity mechanism worked as designed). Private credit is heterogeneous — investment grade vs non-traded BDCs. Pickup over public credit: 50-100 bps depending on instrument. Rejected the 2006-07 analogy because private credit funding matches asset duration (unlike banks doing maturity transformation).

Actionable from Pinto:

• Investment-grade private credit at quality managers: reasonable risk-adjusted pickup.
• Non-traded BDCs: liquidity risk is real — quarterly redemptions can be gated. Only suitable for genuinely illiquid capital.
• Expect more disclosure and possibly more regulation coming, which should narrow the trust gap but may compress current spreads.
• “Greater dispersion in performance” — manager selection matters more than ever; the rising-tide era is over.

4) Jordan Rochester (Mizuho) — UK Politics and FX. UK PM Starmer under leadership challenge — 80+ MPs calling for resignation (81 triggers a contest). Andy Burnham (Manchester Mayor) the most popular Labour figure but not currently an MP. UK structural decline since Brexit driving political fragmentation. On Trump-Xi: likely a “nothing burger” for rates/FX; expect CEO-driven deal announcements but no shift on Taiwan or Iran. On USD/JPY: Japan’s intervention has worked, taking the pair from 160 to 155, but rising oil pushes yen weaker — BOJ may need to hike or oil needs to fall.

Actionable from Rochester:

• GBP volatility likely around any Starmer leadership contest. UK political risk premium remains elevated.
• USD/JPY: dollar weakness vs yen requires either BOJ hike or oil price decline. Be cautious of complacent short-yen positions.
• Trump-Xi summit: don’t position for big market moves; specific corporate deals possible but macro impact muted.

Stocks/instruments specifically mentioned: KKR (markdown referenced), Amazon, Google/Alphabet, Meta (driving sector gains), small-cap/mid-cap indices, BDCs (traded and non-traded), Brazilian agricultural exposure implied. Sponsored ads (Public.com, Hex, Octa) excluded as non-advice.

Chapter Summaries

Constance Hunter on CPI and Latin America. Q2 CPI to average above 4.2%. Strait of Hormuz disruption underpriced. Fed expected to drop easing bias, go neutral. Salient prices (gas, food) driving political pain. Latin America shielded from Middle East; Brazil outperforming Argentina.

Ed Yardeni on the Wall of Worry Bull Market. Earnings driving everything. Mag 7 back leading, but breadth improving with small/mid cap earnings perking up. Financials look attractive. Crises = buying opportunities (March 31st bottom referenced). Stay invested.

Mark Pinto (Moody’s) on Private Credit. Asset quality deteriorating at margins but no 2007 analog. KKR markdown highlighted. Recent stress was a liquidity test in non-traded BDCs, not credit. 50-100 bps pickup over public. Expect more regulation, more dispersion among managers.

Jordan Rochester (Mizuho) on UK Politics, Trump-Xi, and JPY. Starmer leadership challenge real but uncertain timing — Andy Burnham the favorite successor. Trump-Xi summit likely market-muted on macros, may produce CEO-level deals. Japanese yen intervention has worked but faces headwinds from rising oil.