The US economy added 315K jobs in August. Good news. However, wage inflation ripped higher at 5.2% YoY. Based on this, it’s likely the Fed will continue with a period of ‘unusually high’ rate hikes to reduce demand and wage inflation.
"Macro / Economy"
Trees Never Grow to the Sky
Over the past three decades – I’ve developed a strong appreciation for market cycles. For example, I know that it’s impossible to predict the future with any certainty. However, what I can do is prepare based on what I know to be true.
Don’t Fight the Fed
Marty Zweig’s 1970 book “Winning on Wall Street” popularized the term “don’t fight the fed”. Today we have an environment where: (a) liquidity is contracting; and (b) rates are tightening. That’s not conducive for higher prices.
The Bull vs Bear Battle Lines are Drawn
The bulls have market momentum supported by solid breadth. We are past peak inflation (it would seem) which lends itself to a more dovish Fed (in theory). However, valuations are high – trading 18.5x forward. What’s more, the Fed is withdrawing liquidity – not adding to it. That’s an argument for the bears.
For a full list of posts from 2017…