CA - The One Chart That Keeps Me Up At Night - And 2 Fantastic Stocks To Buy

2024-06-21 07:30:00 ET

Summary

• The S&P 500's rise reflects bullish fund manager sentiment, but euphoria narrows the margin for Fed error in combating inflation without harming economic stability.
• Despite optimistic expectations, recession indicators still signal significant risk, highlighting a disconnect between fund managers and economic reality.
• Rising interest expenses pressure the government to prioritize financial stability over inflation control, suggesting investors should prepare for persistent inflation.

Introduction

Everything is fine.

The S&P 500 is up more than 15% year-to-date as I write this, with the most bullish fund manager survey sentiment since November 2021, according to Bank of America.

Moreover, this shift comes with a very interesting change in economic expectations. Roughly one year ago, more than one in four fund managers expected a hard landing. Less than 4% expected a no-landing scenario. Now, the exact opposite is visible. 26% expect a no-landing. Just 5% expect a hard landing.

So far, this makes sense. After all, why would fund managers be more bullish if they did not expect the economy to improve?...

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