For now, the economic backdrop can best be characterized as “growing but slowing.” The only real question now is how fast the slowdown is likely to be. This is where we diverge from the consensus.
Economists are projecting growth in excess of potential until at least the end of 2022 , but we think we could be in for a period of below-trend growth as soon as the back half of this year. If we are right in this view, inflationary pressures are going to ease with a lag and disinflationary forces will become more pronounced.Article content
With this in mind, we believe there are opportunities for investors to take advantage of the still-too-rosy assessment from economists and strategists. This view is reinforced by our in-house S&P 500 sector indexes, which very clearly illustrate what is, and what is not, currently working within the equity market. As a reminder, we have four S&P 500 buckets we track: inflation , pro-cyclical and defensive growth (health care, consumer staples, technology.
There are some key elements worth pointing out. Notably, our S&P 500 inflation index peaked in mid-May and is now down nearly 10 per cent. This is exactly the time 10-year Treasury break-even rates peaked. Together, these two dynamics suggest the market is becoming less concerned about inflationary pressures on the horizon.Article content
EconguyRosie The No. 1 economist on Wall Street sees a solid outlook into year-end
EconguyRosie Investment advice from the same guy who very confidently recommended to fight the Fed in 2020 lol.
EconguyRosie Why would I move into a trade that has already worked for almost an entire quarter? Unless you are extrapolating that tech and healthcare outperform for the rest of the year, which would imply 8 months of outperformance…doubtful.
Rosenberg is clueless. From March 2020:
It's getting more and more obvious that the economy is going to crash
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