AFMC - The Stock Market Bubble Is Bullying The Fed Into Keeping Rates High
2024-03-17 09:00:00 ET
Summary
- The S&P 500 has surged 25% since October despite stagnant earnings, driven by Fed pivot hopes and investor interest in AI, weight loss drugs, and high P/E blue-chip stocks.
- AI has not caused corporate profits to increase significantly, with negative earnings guidance outweighing positive guidance in Q1 for the S&P 500.
- Coincident economic indicators are showing a weakening labor market and economy for the Eastern Seaboard and Midwest US. Leading indicators have been negative for much longer.
- The Fed is caught between a weakening labor market on one hand and a stock market bubble and resurgent inflation on the other.
- This week's FOMC meeting should be very interesting to follow.