Can You Imagine What The Market Will Do Next Year! March 22, 2024

Locator: 46826ECON.

Can you imagine what the market will do when the Fed starts cutting rates? Wow.

I don't know if folks caught it but the "talking heads" are finally starting to talk about "the supply chain" as the main reason for inflation.

• as the supply chain improves, inflation will drop
• supply chain probably accounted for 80% of that peak inflation at 9%
• in fact, inflation has now dropped from the 9-handle to the 2-handle
• the supply chain portion of inflation was transitory
• the underlying inflation rate (excluding supply chain issues) is said to be "sticky." In fact, it's normal. A 2-handle inflation rate is exactly what we want
• bigger (biggest?) concern is deflation (Zeihan spoke to that today)
• folks now realize -- and JPow practically said it -- a high Fed rate exacerbates supply chain issues
• hopefully that doesn't need to be explained
• this year's Fed rate cuts will have psychological effect on Wall Street; little to no effect on Main Street
• if Fed stays on course, Main Street might start to see gains in 2025, certainly by 2026
• housing will remain most stubborn issue
• auto sector is about to surge (2024 - 2026)
• biggest catalyst: Biden delaying emissions rules
• suggests auto makers can do just fine with fake EVs (hybrid EVs)
  

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US Economy

Link here.

5% returns: I just mentioned this yesterday -- the paltry 5% returns. Link here.

Housing: doesn't look like these folks are expecting a recession any time soon. Link here. Contracts would have been signed a month or two earlier.

All indicators: a robust economy. Link here.