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TheBRRR’s Thoughts

GM. Markets are closed today but we wanted to give you a quick update headed into the weekend.

As we previewed on Wednesday, some new inflation data hit the tape this morning in the form of the monthly PCE report, measuring personal consumption prices.

It essentially landed all as-expected, with the index cooling to 2.8% y/y vs 3.1% last month.

Given Powell’s recent comments about what he needs to see before cutting interest rates, markets took the data point as a reason for optimism and the odds of the first interest rate cut coming at the June meeting rose from 55% to 61%.

The other story we’re covering today is about a change to US nuclear energy policy, with new funds getting earmarked to re-open a nuclear plant in Michigan.

As premium members have known for months, we continue to hold URA (uranium ETF) as broad bet on the technology reemerging throughout the world as we seek lower cost energy solutions.

One other story catching our eye headed into the weekend:

Director of Congressional Budget Office Rings Alarm On US Debt

In the article, Phillip Swagel, the head of the Congressional Budget Office (CBO), issued a warning about the potential for a U.S. market shock. This warning comes in response to the unprecedented trajectory of the U.S. federal debt, which has soared to $26.2tn, or 97% of GDP, exacerbated by out-of-control spending.

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US To Re-Open Nuclear Plant In Michigan

What Happened:

• The U.S. federal government announced a $1.5 billion loan to restart the Palisades nuclear power plant in southwestern Michigan, marking the first-ever reopening of a nuclear facility in the country.

• Holtec International, having initially bought the 800-megawatt plant for dismantling, is now planning to reactivate it by late 2025, backed by both the state of Michigan and the Biden administration.

• Energy Secretary Jennifer Granholm highlighted nuclear power's role as the leading source of carbon-free electricity in the U.S., emphasizing its contribution to job security and environmental goals.

• Critics, including a coalition of green activists, have voiced opposition, labeling the Palisades plant a “zombie reactor” and demanding regulatory scrutiny.

Why It Matters:

• This move signifies a pivotal shift towards nuclear energy in the U.S., driven by an urgent need to expand clean energy sources amidst growing electricity demands, particularly from AI data centers, federally subsidized manufacturing plants, and the electric vehicle transition.

• The decision to reactivate a previously shut-down nuclear plant sets a precedent for the nuclear energy sector, potentially catalyzing a nationwide resurgence of interest and investment in nuclear power as a sustainable and reliable energy source.

• The emphasis on nuclear energy's role in job protection and community support underscores the broader economic and social benefits of this energy shift, beyond environmental implications.

• Uranium stocks and prices are likely to surge as the nuclear renaissance gains momentum, spotlighting uranium as a critical commodity in the global shift towards cleaner energy solutions.

Zerohedge

New Personal Consumption Data Improves Rate Cut Odds Slightly

WHAT HAPPENED:

• Inflation In Line with Expectations: The Federal Reserve's preferred measure of inflation, the personal consumption expenditures (PCE) price index excluding food and energy, rose by 2.8% year-over-year and 0.3% month-over-month, aligning with economic forecasts.

• Core Inflation Remains Steady: The core PCE, which offers a closer look at the underlying inflation trends by excluding volatile food and energy prices, also matched expectations. It recorded a 0.3% increase for the month and a 2.5% rise over the past 12 months, against 0.4% m/m and 2.5% y/y projections.

• Consumer Spending Surges: Demonstrating robust economic activity, consumer spending jumped 0.8% on the month, significantly outpacing the 0.5% estimate. This leap underscores strong consumer confidence.

• Steady Increase in Personal Income: Although slightly below expectations, personal income saw a 0.3% rise, suggesting ongoing stability in the labor market and earning capacities of consumers. This slight softening compared to the 0.4% estimate still reflects a healthy income trajectory.

Why It Matters

• No Negative Surprises: The alignment of inflation data with estimates provides a sense of predictability and stability for market participants, suggesting that the Federal Reserve's monitoring of inflation is in sync with market dynamics.

• Consumer Confidence: The significant jump in consumer spending, well above estimates, is a positive sign of consumer confidence and economic vitality, potentially buoying markets and indicating resilience in economic activity.

• Watchful Optimism for Rate Decisions: With inflation metrics in line with expectations and robust consumer spending, investors and analysts may adopt a watchful optimism regarding the Federal Reserve's future interest rate decisions.

CNBC

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.ll