Developed Countries
The Fed faces a dilemma. Cut rates early to avoid a recession, but at the risk of not slaying wage inflation. Or, not cut rates early to ensure that wage inflation is slayed, but at the risk of a downturn. Faced with such a dilemma, the lesser evil is to slay wage inflation even at the risk of a downturn. Meaning that the market has overpriced early rate cuts. We discuss some other investment implications, and identify two rebound candidates.
The NFIB Small Business Optimism Index delivered a slight positive surprise on Tuesday. The index rose 1.3 points to a five-month high of 91.9 in December and beat consensus expectations of 91.0. However, the contents of the report were more mixed. On the…
The Santa Claus rally started in late October lifting the S&P 500 by 15.8%. However, there are signs that the rally is getting tired. Consider the following: The S&P 500 has been trading at around 4,750 since the middle of December. …
S&P500: Should Investors Buy The Dip?
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BCA Research’s US Bond Strategy service recommends investors keep portfolio duration close to benchmark for now. They will increase rate exposure as the labor market downturn worsens. Treasury yields are up slightly to start the year, but last Friday’s…
The market’s pricing of a soft landing means that geopolitical risks are becoming more, not less, relevant in 2024. US domestic divisions will invite challenges as foreign powers rightly fear that US policy will turn more hawkish after the election.
Optimism among investors and economic agents continues to improve in the Eurozone. The Sentix Economic Index for the Eurozone rose from -16.8 to -15.8 in January – in line with consensus expectations and marking the third consecutive increase. The current…
Growth in US disposable income has outpaced inflation nearly every month since mid-2022. Consumption is principally driven by income, but in the US it has gotten a meaningful assist the last two years from the drawdown of excess savings accumulated over the…
The S&P 500 has started off the new year on a weak footing, dropping by 1.5% in the first week of January. Indeed, by the end of 2023, several indicators were warning that conditions were becoming bearish. In particular, investors have…
Our Portfolio Allocation Summary for January 2024.