Investors may have celebrated the end of high inflation too soon. The CPI report shows inflation bouncing higher and thus pushing back the start date for Fed rate cuts. This has the S&P 500 (SPY) coming off recent highs. This begs questions like how much more downside could we see? And when will the bull market get back on track? 44 year investment veteran Steve Reitmeister shares his answers to these questions in this timely commentary including a preview of his top picks to stay ahead of the pack. Read on below for more.

High inflation refuses to “go quietly into the night“.

Instead, the most recent CPI report was too hot which greatly downgraded the odds of a rate cut coming in June or July. With that bond rates went higher on Wednesday and stock prices went lower.

Thursday’s PPI report was a bit tamer helping to ease the mood. But it does cloud the outlook for the market.

So, we will do our best to shine some light on our path forward from here in today’s commentary.

Market Commentary

April started with a very mild sell off which seems quite natural given then rapid pace of gains in Q1. Then just as stocks were bouncing back towards the highs we got served up a unwelcome CPI report on Wednesday that had investors hitting the sell button once again.

Unfortunately, year over year inflation increased from a 3.2% reading last month to 3.5% this time around. Yes, that is the wrong direction as we want to continue on our glide path towards the Fed’s target of 2%.

We all know that inflation rarely moves in a straight line. But this was not the first inflation report above expectations…but it certainly was the most resounding negative that investors could not dismiss.

The nerds out there (like myself) will note that the Sticky Inflation readings got even worse. That reading went up to 5% based upon the month to month change from the previous 4%. There is simply no way the Fed can look at this recent data and decide to lower rates in May…June…and probably not July.

The world of investors most certainly agreed with this notion given the seismic moves in the bond market. Most notable was the 10 year Treasury rate spiking to nearly 4.6% on Wednesday. That cooled down a notch on Thursday given the “slightly” better than expected reading for PPI.

This greatly changes expectations for the timing of the first Fed rate cut. A month ago there was 72% probability of that taking place in June. That is now down to 22%.

Moving out to July that was considered a near slam dunk at 90% odds of lower rates. That is now a coin toss at just 49% likelihood.

Finally, we see the September meeting coming in at 70% odds of lower rates. This all points to investors going over the May 1^st Fed testimony with a microscope looking for even the smallest clues of what comes next.

Long story short, I think it is borderline insane for investors to expect new highs for stocks until inflation is better under wraps and certainty increases on the timing of the first rate cut. That points to the recent high of 5,265 for the S&P 500 (SPY) as being the top end of current trading range.

The bottom of that range is a bit less clear. Will investors do more of a consolidation slightly under recent levels? The hearty bounce on Thursday seems to point in that direction. But the longer things go on without a resolution to the matter, the more we could break below the 50 day moving average at 5,105 and perhaps give 5,000 a serious test.

If that scares you, then might I recommend you put your money in the bank rather than the stock market.

The only way you can enjoy the reward of a 27% gain for the S&P 500 since late October is by taking the risk that comes with mild pullbacks and tougher corrections from time to time. Meaning that testing 5,000 or even lower would be a yawn in the history of stock market movements which has improved our net worth considerably over the past few months…years…decades…generations…and so on.

My trading plan is to remain bullish. Just have a better eye towards the value of your positions. If you wouldn’t buy more shares of those stocks today…then perhaps time to sell and add new stocks that you feel have better upside potential.

That also calls for a “buy the dip” mentality as there likely will be more volatility and rough sessions ahead. Those are the times to step in and add shares of your favorite stocks.

All in all, we are moving back to a more normal bull market. Where 2 steps forward and 1 step back is just part of the dance. So, all the more reason to find the beat and dance right along.

What To Do Next?

Discover my current portfolio of 12 stocks packed to the brim with the outperforming benefits found in our exclusive POWR Ratings model. (Nearly 4X better than the S&P 500 going back to 1999)

This includes 5 under the radar small caps recently added with tremendous upside potential.

Plus I have 1 special ETF that is incredibly well positioned to outpace the market in the weeks and months ahead.

This is all based on my 43 years of investing experience seeing bull markets…bear markets…and everything between.

If you are curious to learn more, and want to see these lucky 13 hand selected trades, then please click the link below to get started now.

Steve Reitmeister’s Trading Plan & Top Picks >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Total Return

SPY shares were trading at $515.01 per share on Friday morning, down $2.99 (-0.58%). Year-to-date, SPY has gained 8.69%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

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If you are plugged into fashion discourse, you’ve probably heard about High Sport Kick Pant by now (perhaps against your will). They are stretch ponte trousers with a cropped flare above the ankle and pleats down the center of the legs. Sturdier than leggings and distinctly more polished. The intrigue around these pants reached a fever pitch on Substack in late 2023 – early 2024. The Kick Pant has developed a cult following, but skepticism has started to mount.

Substack, the newsletter platform, is integral to the phenomenon of High Sport. It’s where fashion influencers and ex-editors with large followings raved about the pants to their readers. Several glowing endorsements were published within a short time span. Word spread like wildfire within the platform’s ecosystem. Substack writer Rachel Solomon of Hey Mrs. Solomon describes the High Sport pants as a “fireball” item that seemed to “materialize out of nowhere.” She believes the hype is tied to the inherent “miracle potential” of pants, which are extra compelling because “the ass/thigh area is so important when it comes to fit and use case.” People will pay a lot for pants that make their butt look good.

“The chatter about these pants on Substack chat was non-stop,” says the writer of Totally Recommend, a self-described “recovering marketing CEO” who goes by Rufina. Her assessment of the situation? It seemed like no one beyond fashion writers and influencers actually owned the High Sport pants, yet everyone was hunting for alternatives. “I realized we were all searching for dupes without even knowing what the originals were truly like. That’s when my curiosity really kicked in. I knew I had to get my hands on these pants,” Rufina states.

Vi Huynh wears a thrifted version of the High Sport pants;

Courtesy of Vi Huynh

Solomon and Rufina both bought the pants and wrote about them on their Substacks. Both writers gave their honest opinions on everyone’s burning question: are they worth it? And, of course, where can one find a good dupe? Rufina’s review series, “The Scoop On The High Sport Dupe,” made the Substack rounds for its thorough list of dupes from Ann Mashburn, Donni, and Spanx to Banana Republic, Old Navy, and J.Crew. More chatter ensued.

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Then, The Cut published a High Sport piece last month that laid bare the financial incentives for Substack writers recommending the High Sport pants with affiliate links. The public reception of the article drove the discourse around these pants towards suspicion. It reminded people of the importance of taking product recommendations with a grain of salt when someone stands to make a hefty commission.

High Sport skepticism has kindled on Substack—the same place where the fanfare began. This time, discourse around the pants are tinged with mixed feelings around the gray area of affiliate marketing and fashion writing. Kickbacks on the Kick Pant have soured the hype for many.

In her latest High Sport dupe post, Rufina ponders if we should aspire towards these pants in the first place: “Are they an unspoken application to an elite club, where the entry fee is a slim waist, a fat bank account, and a life elegantly soaring above the mundane irritations familiar to the rest of us?” Readers resonated with this perspective. The comment section contemplated the writers’ ability to make $135 per sale via affiliate links on a rave review. “For some people, these pants might still be their top pick, fitt ing their style and budget. But knowing about the commission thing bursts the bubble,” Rufina continues. Solomon reflects on how the High Sport hype has played out. “I have noticed a little more skepticism, almost like we can all suddenly breathe a sigh of relief and go…wait, aren’t these just thick, hot pants that have a cute length?”

Vi Huynh wears a thrifted version of the High Sport pants;

Courtesy of Vi Huynh

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Rachel Solomon wears the High Sport Kick pants;

Courtesy of Rachel Solomon

Some have held a critical eye towards High Sport pants from the start. Em Seely Katz, news editor of Magasin and writer of Human Repeller, knows the nitty-gritty economics of luxury clothing production and marketing. “I know a pair of stretch pants should not cost nearly a grand without a 1000% or so markup,” Seely-Katz reveals.

When vintage seller Vi Huynh first saw the High Sport pants, the “egregious price point” stopped her from what would have been an immediate purchase otherwise. Huynh keeps up with niche fashion discourse and believes that High Sport’s brand strategy relies on the appeal of “quiet luxury” rather than a truly superior material product. “They don’t need regular people buying their pants. They’re saying: we’re the Loro Piana of stretch pants,” she continues.

Despite the skepticism around price point and kickbacks, the appetite for High Sport dupes has not waned. Seely-Katz has been diligently researching mid-price-range dupes in response to the Magasin readership’s interest. For example, they say that Sézane’s new gingham pants (around $200) are just as worthy of wear as the originals. Huynh maintains that the High Sport look is easy to find at thrift stores due to the popularity of ponte pants during the 90s and 2000s. Her advice? Focus on material—while rayon, polyester, and spandex blends are common, the better quality ones feel thick to the touch and retain shape when stretched.

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However, High Sport diehards maintain that the dupes are incomparable to the original. Writer Jess Graves of The Love List reports that the material from Old Navy and Donni versions were “flimsy and thin,” a far cry from High Sport’s “thick Italian knit that holds you in.” Graves, who purchased the High Sports with her own money, wears the pants “so often the cost per wear is probably around a dollar at this point.”

Ruffina wears a dupe of the High Sport pants;

Courtesy of Rufina

Vi Huynh wears a thrifted version of the High Sport pants;

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Courtesy of Vi Huynh

Unlike Instagram, Substack is still a relatively new space where the norms of affiliate marketing—and how consumers can expect to engage with it—are still taking shape. One can find a broad mix of fashion content, from personal essays and styling tips to shopping-driven posts heavy on affiliate links. Perhaps it is due to this broad spectrum of how and when writers participate in affiliate marketing that pinpointed skepticism towards High Sport pants in a way that may not have materialized on, say, Instagram.

Seely-Katz, who does use affiliate links on Human Repeller, emphasizes that they have built trust with their readers in terms of how they disclose commissions. “People who read my newsletter know that I emphatically don’t go out of my way to center affiliate links, many of my posts having none at all […] I am thoughtful about what products I endorse, no matter the price point,” they state. Graves echoes this sentiment. She views affiliate income as compensation for the work of content creation. In regards to her Substack, “my readers get that if I am publishing something without a paywall, affiliate links are a way to help me accrue some payment for that time spent. I don’t let it sway my editorial decisions though,” Graves notes. Rufina does not use affiliate links but acknowledges that with the instability of the media landscape, “It’s really tricky for me to say how writers should be making their money.” As a former advertising professional, her main concern was seeing High Sport purchase links posted without an affiliate disclaimer.

Ultimately, the story of High Sport reveals how Substack is becoming an increasingly robust ecosystem for launching status-y products that go viral within a subset of fashion consumers. Seely-Katz describes the phenomenon as a “self-fulfilling prophecy,” where people who buy such items are more likely to broadcast them in their publications, “creating an illusion that literally everyone is buying this stuff.”