Fed action isn’t causing the real economy to slow dramatically, as the market fears. Every time we get data confirming this, the market, instead of celebrating good news, fears for even more Fed action, which it believes will cause real harm. At some point, good news has to be accepted as good news.
Every once in a while there are two (or more) possible scripts. We are at one of those moments now. We have had a bear market, and we have rallied off the bottom; but now what?
Why do they keep changing the definitions of words? Based on the initial reading for 2nd quarter 2022 GDP, we just had the second quarter in a row of negative growth. So we are in a recession, right?
This attention to attitude-measured-by-surveys is not helping the market. Attitude changes far more rapidly and more extremely than reality. There are a lot of real issues out there, primarily inflation. But, the biggest issue in the market right now is the fixation on mood.
In our last Insight I predicted that after the Fed’s rate hike we would see the market sell off and then rally. We got that part right, but now what? Is this the final lasting rally or just another short-lived bump?
