The Aftermath Economy. We will forever believe that locking down the economy for COVID-19 was a massive mistake. In other words, the US enters the decades ahead with more debt, less spending power, an undereducated population, and less petroleum put aside for national defense. The US has made the future riskier.
Democrats Overperform. Remember: whether you’ve been cheering or jeering the election results, don’t let that cloud your investing judgement.
Beware a “Gridlock Rally”. Gridlock has been good for stock market investors in the past few decades, particularly when there’s been a Democratic president and the Republicans in control of at least one house of Congress.
Drop in Budget Deficit is a “Sugar High”. Look for bigger budget deficits in the next few years as the revenue “sugar high” wears off.
The Last Hurrah? An economic storm is coming. The sun is still shining today, but, with almost all the net growth in Q3 coming from the trade sector, the clouds are forming on the horizon.
Reports: Solid Growth, Persistent Inflation... we think inflation will eventually slow down. But that doesn’t mean it’s going to slow down as fast as the Fed thinks.
No Recession, Yet. We are not “recession deniers,” we just don’t think one has started yet.
More Trouble Ahead. Why a recession?... a monetary policy that’s tight enough to control inflation is going to send the economy into a recession.
Will Higher Interest Rates Tame Inflation? Interest rates don’t determine inflation; the amount of money circulating in the economy determines inflation. And this is where the problem lies.
The Fed: What to Expect and What to Watch... the Fed is almost certainly going to raise rates by three-quarters of a percentage point (75 basis points), just like it did back in both June and July.