We have written all year about the frustration of false narratives and a misleading S&P 500, yet it has ended on a much brighter note: Patience has paid off, and finally the onslaught of solid economic data paired with slowing inflation has made the bears change their tune. What will 2024 bring us?
If I have a gift as an investor, it is to always question the narrative and favor reality. This trait, thanks to my parents, has served me well during my more than 30 years in the investment industry. It is also why I have found 2023 to be so frustratingly maddening. Yet it is Thanksgiving once more, and we have much for which to be thankful.
What was the most important moment in Jerome Powell’s post-Fed meeting comments this week? When a reporter asked about the Fed staff removing recession from their forecast, Powell responded, “It is hard to see a recession when one looks at the data.”
Which will you believe, your sense of reason or your sense of sight? Today we continue to hear that higher interest rates are going to slow down our economy. It makes sense: higher rates make home mortgages and car loans more expensive. Rates on credit cards will be higher, so it must have an impact, right? Logic may say yes, but observation says no.
Wall Street is also a broken record today. The Fed met this week and held rates steady, but indicated that they will keep them where they are for longer than they previously thought. The market reacted negatively, and the pundits are once again yelling, “Recession is coming, recession is coming!” But is it?
