After an astonishing rally that sent GE Aerospace (GE) up from below $90 last Oct. 2023 to as high as $143.84, investors will watch its split. GE spun off its energy unit. Investors may buy GE Vernova (GEV) to get exposure to the wind turbine production and data center businesses.
Investors may look at Viatris (VTRS), which is a spinoff from Pfizer’s (PFE) Upjohn business unit and Mylan. GSK demerged its consumer business through Haleon (HLN). J&J separated its consumer business through Kenvue (KVUE).
In any of those spin-offs, investors should set a three-year timeframe to let the separated businesses develop.
Oil Prices Rise
Markets might as well ignore the core personal consumption expenditures price index. The inflation measure excludes food and energy since those goods are volatile. The bad news is that oil prices are rising. So, the report that the Fed relies on is overlooking the higher oil prices.
Oil prices are near their highest levels of this year, at around $85 a barrel.
Readers should watch the sharp rise in Treasury bond yields closely. The 30-year ETF (TLT) is selling off. The debt market is pricing in a low chance of the Fed cutting rates in June. While equity traders are relying heavily on three rate cuts, that is less likely.
The U.S. GDP figures are strong, so unless the economy suddenly reverses toward a recession, a rate cut heightens inflationary risks.
