Two important inflation reports -- the Consumer Price Index and the Producer Price Index -- were released earlier this week and both signaled that pricing pressures are again easing. For now. Both reports indicated that overall pricing pressures remain well below the peak rates in the summer of 2022. But both also confirmed that inflation remains above the Fed's target of 2.0%, and that it may take a while to get to that level. Let's first take a deeper dive into the Consumer Price Index. The news here was good, as the annualized headline number ticked lower from the previous month (2.3% versus 2.4% and 3.0% three months ago). According to the latest CPI report, the core inflation rate (ex-food and energy) was steady at 2.8%. Once again, the most encouraging data was related to Transportation Services and Shelter costs. In these sticky categories, year-over-year inflation rates have declined meaningfully. Gas prices are also sharply lower year over year, which should please consumers. The other inflation report was the Producer Price Index. The PPI measures pricing trends farther up the supply chain, at the manufacturing level. Here, the news was also generally positive. For example, the PPI final demand annual rate through April was 2.4%, compared to 2.7% a month ago and 3.7% in January. Based on the fundamentals, we expect pricing pressures to continue easing as the housing market cools due to high mortgage rates, and the price of oil stays below $90 per barrel (current price is $61). But that low price of oil reflects a new wild card that has entered the forecasting picture: Trump's trade wars. His tariffs -- should they ever go into effect -- will almost certainly raise prices, sending the inflation rate higher again. That will put new pressure on the Federal Reserve, which we think -- again, based on the fundamentals -- should be in position to lower rates in the second half of the year.

Mondelez International Inc., headquartered in the Chicago suburb of Deerfield, Illinois, is one of two successor companies from the October 1, 2012 break-up of Kraft Foods. The company name was created by employees and is hybrid of the Latin word for world (mundus) and a modification of 'delicious.' The other company is called Kraft Heinz. Mondelez sells products in over 150 countries and has operations in approximately 80 countries and production facilities in 45 countries. The company regularly uses the term 'Power Brands,' to describe its largest global and regional brands. Under the biscuit banner, these include Oreo cookies, Chips Ahoy, Ritz crackers, and TUC/Club Social, belvita biscuits. The chocolate power brands include Cadbury Dairy Milk. The company has approximately 90,000 employees. The shares are a component of the S&P 500.

Coca-Cola, based in Atlanta, is a leading producer of soda, juices and juice drinks, and ready-to-drink teas and coffees. The company distributes its products in more than 200 countries. Core brands include Coca-Cola, Diet Coke, Sprite, Fanta, Coca-Cola Zero, Vitaminwater, Powerade, and Minute Maid. KO's operating groups are Europe, Middle East & Africa; Latin America; North America; Asia Pacific; Bottling Investments; and Corporate. The company sells beverage concentrates or syrups and finished beverages. The company has approximately 69,700 employees. The shares are a component of the S&P 500.

PepsiCo is a global leader in snacks and beverages, owning well-known household brands including Pepsi, Mountain Dew, Gatorade, Lay’s, Cheetos, and Doritos, among others. The company dominates the global savory snacks market and also ranks as the second-largest beverage provider in the world (behind Coca-Cola) with diversified exposure to carbonated soft drinks, or CSD, as well as water, sports, and energy drink offerings. Convenience foods account for approximately 55% of its total revenue, with beverages making up the rest. Pepsi owns the bulk of its manufacturing and distribution capacity in the US and overseas. International markets made up 40% of both total sales and operating profits in 2024.