AFMC - Sunbeams And Storm Clouds: Investing For Slow Growth Disinflation And Lower Rates

2024-03-17 08:30:00 ET

Summary

• Positive developments like AI advancements, rare-earth mineral discoveries, and strong employment have extended the business cycle.
• Labor market weakening, declining wage growth, and weakening consumer spending power are still concerns for the economy.
• I still expect moderating GDP growth, disinflation, and falling interest rates for the foreseeable future.

Here in Texas, as Summer approaches and overpowers the fragile, fleeting Spring season, the rapid changes in pressure and temperature often render powerful storms.

Giant, commanding clouds that look like the anvils of the gods roll across the vast sky until all wisps of blue have been blotted out. The darkness and opacity of an overcast sky on the verge of a storm can be menacing.

But sometimes the dark clouds gather and the storm never comes. Sometimes there's only a brief, light rain, and then the clouds crack open and give way to glorious beams of sunlight stretching down from the heavens.

I think this image is a decent illustration of today's economy.

In November 2023, I wrote an article titled " Recession Is Imminent: Position Your Portfolio For Monster Dividend Growth " arguing that due to tight financial conditions, weakening consumer spending power, and poor business conditions, a recession is likely on the way.

Since then, employment has held up more than expected and stock market indices have soared to new all-time highs....

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