GME - Preparing For New All-Time Highs As Disinflation Reasserts Itself
2024-05-14 09:38:11 ET
Summary
- Market averages remain flat before inflation data is reported, causing pessimism about stocks and bonds.
- Preconditions for lower inflation are in place, with signs of softening labor market and slowing consumer spending growth.
- Expectation for rate cuts and lower Treasury yields, along with strong corporate profits, support a positive market outlook.
Yesterday felt like the quiet before a storm for the major market averages, which were relatively flat in light trading before a deluge of inflation data is reported this week. The bears are convinced that this so-called storm will be a disastrous one for stocks and bonds, as sticky inflation during the first quarter continues into the second, while the economic expansion starts to crack under the weight of higher interest rates. From their perspective, our only options are a hard landing, stagflation, or recession. The problem with such pessimism is that if your timing is not accurate, you miss a tremendous amount of upside, as most have over the past year, as well as lead a lot of investors astray. The storm looks more like a sun shower to me. The prudent approach is to prepare for new all-time highs as disinflation reasserts itself during the second quarter and a soft landing comes into view....
Preparing For New All-Time Highs, As Disinflation Reasserts Itself