Inflation relief was palpable this week, with both the producer price index and consumer price index reinforcing that inflation is trending down. The real issue for the market was an emerging "growth slowdown" narrative, and fears about how far it would go. Today's retail sales report and strong commentary on the consumer by Walmart reinforces that the consumer may be slowing, but is still resilient. Bottom line: the soft landing is very much alive.
5% Neutral 28.6% Bearish 28.9% Source: AAII During periods of euphoria, bullish levels go into the low 50s, so a reading in the low 40s is well below euphoria. Let's look at other measures of the market: Inflation: Trending lower Interest rates: Rate cuts expected Growth: Slowing but no recession Earnings: Holding The fact that earnings growth estimates are holding up is critical. S & P 500 earnings growth of 10% is expected in 2024, and 15% growth is seen for 2025.