In today’s briefing:
- The Seven Reasons Why This Cycle Is Different
- When Does The Pain End?
The Seven Reasons Why This Cycle Is Different
- The main reason why stock prices haven’t skidded further in the face of earnings downgrades is because this cycle is different from others.
- This has been an extraordinarily rapid rate hike cycle. Not only has the market discounted a recession, it may already be discounting Fed easing in 2023.
- The acid test for market psychology will be Q2 earnings season. More immediately, the June Employment Report will serve as another guidepost for the trajectory of monetary policy.
When Does The Pain End?
- The market is very worried about falling growth and an inflation rate that’s slow to decelerate.
- Few have considered a scenario of a combination of small improvements in supply and demand destruction from higher rates is just enough to soft-land the economy.
- The rise of recession hysteria has meant that risk/reward is becoming tilted to the upside for equity investors.
Before it’s here, it’s on Smartkarma
