2024-05-04 11:00:00 ET
Summary
- The stock market reacted to the Federal Reserve's decisions with initial optimism, then reverted to pessimism, and now seems back to optimism.
- Fed Chair Jay Powell does not expect inflation to return to the target of 2% in the next few months but believes it will come down later this year.
- There are weakening trends in small business, the labor market, and consumer finances that lead me to believe the economy is in the "late-cycle" phase.
- REITs are an incredible buying opportunity right now and poised to rally with a vengeance over the next few years.
- My shopping list for the rest of May is chock-full of high-quality, high margin of safety dividend growth stalwarts.
So much data, so little time!
As the old joke goes, I am feeling a bit like the mosquito in a nudist colony... where do I begin?
After covering the first major headwind to GDP growth (rising trade barriers) that I discussed in last week's article , I had planned to dive into the second major headwind to growth this week: fiscal excess and the government debt burden.
But between economic analysis (including some very interesting charts) and a huge wave of earnings reports, I'm pushing off the "headwinds to GDP" series to next time.
Here's the order of events for today:
- Fed Chairman Powell said some stuff.
- Weakening trends in Small Business.
- Weakening trends in the labor market.
- Are high interest rates backfiring when it comes to housing?
- Why consumer sentiment is sliding.
- Why REITs are an incredible buying opportunity right now.
- The high-quality dividend stocks I plan to buy in May.
Here's my bottom line as far as the economy goes. In November 2023, I argued that " recession is imminent " and would show up sometime this year. But a few weeks ago, I provided a mea culpa and discussed the three unforeseen (at least by me) reasons why the economy has stayed relatively strong so far in 2024: affluent consumer spending, rapidly rising consumer debt, and robust immigration....
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For further details see:
Every Dividend Stock On My Buy List For May