Inside this Issue:

• Inflation Getting Worse: Fading are Hopes that Trends Would Reverse

• Oil Hits $121: If This Keeps Going, the Economy’s Done  

• Private High: The Craving for Private (i.e., Alternative) Assets   

• Steel of Fortune: Cleveland Cliffs and the Modern U.S. Steel Sector

• Commiewood: How Beijing Shapes What Hollywood Makes 

• When the U.S. Forbade Trade: A Look Back at President Jefferson’s Embargo 

• And This Week’s Featured City: Pueblo, Colorado, Don’t Stop the Steel  

Quote of the Week

“We haven't seen any slowdown in terms of the willingness to buy security. It continues to be the number one risk factor for any board of directors.”

-  George Kurtz, CEO of cybersecurity firm Crowdstrike  

Market QuickLook

The Latest

Not so fast. Yes, supply chain pressures are easing a bit. Yes, the labor market shows early hints of loosening. Yes, the strong dollar is pushing down import prices. And yes, these deflationary forces influenced the Commerce Department’s April price index (the PCE), which showed annual inflation ex food and energy dropping below 5%. But Mr. Powell, put down the champagne.

The latest Labor Department inflation reading—the consumer price index for May—was an unmitigated refutation of any progress the PCE report might have suggested. Prices, the CPI showed, jumped a full percentage point just from April to May, after rising only 0.3% from March to April. Annual CPI inflation now stands at 8.6%, up from the 8.3% annual reading in April. U.S. prices are now rising at their fastest clip since 1981.

Markets reacted with alarm. Stock prices, already battered this year, dropped again—the S&P 500 index is now 8% below its level this time last year. Yields on 10-year Treasury bonds, which in theory should rise when investors worry about future inflation, did exactly that last week, soaring once again beyond the 3% mark. The cost of a 30-year mortgage, accordingly, jumped as well. The mood wasn’t brightened any by oil, whose price reached $121 per barrel. That’s starting to feel more and more like an altitude where the economy starts to have trouble breathing.