Most global bond and stock indices rallied last week, with several global (including U.S.) stock indices closing at record highs. PCE data for April confirmed elevated inflation in the U.S., and the fact that consumers are getting poorer. This is a real contrast with the ever-higher improvement in most global asset prices.

There were more ideas coming from Mr Trump last week than seemed possible, a reflection of desperation as the affordability crisis continues to weigh on his administration and the approaching mid-term elections. Some ideas were simply ridiculous, but investors are used to it by now. This was reflected as risk markets remained solid, with several U.S. and foreign stock markets closing Friday at record highs.

This is a short article about the K-shaped economy, driven by persistently high inflation and exacerbated by the errant "One, Big Beautiful Bill".