Deluard noted the S&P 500 has rallied 25% from its October lows, and now trades at more than 22 times earnings. Investors might decide to cut their exposure to stocks, given the growing pressure on corporate profits, and the fact that 2-year and 10-year Treasury yields have jumped to almost 5% and 4% respectively, he said.will also thaw in time, Deluard said. Many homeowners have locked in cheap, fixed-rate mortgages and are loath to give them up by selling.
"Look at the real estate market, no one wants to sell," Deluard said."But eventually, people switch jobs, move cities, get divorced, die. That will bring the prices down." As for the wider US economy, it has defied recession forecasts and rebounded for a few reasons, Deluard said. He pointed to public-spending programs such as the Inflation Reduction Act and CHIPS and Science Act, cost-of-living adjustments to payments for social-security recipients, and inflation-related tweaks to income-tax brackets.
However, Deluard predicted the growth outlook would darken by January or February."A lot of that momentum is going to slow, it's going to hit the brakes," he said, adding that the Fed's rate hikes are ultimately"going to bite."
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