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Markets are on a good path, but room remains

If I had to recap the markets so far in 2024, here’s how I see it:

1) Early Growth Issues

2) Inflationary concerns take over while growth remains strong

3) A balance between the two

The markets are now on a tight line. Inflation fears are fading, and part of the reason is slowing growth. If growth slows to a real rate of around 2-3% and inflation also rises to 2%, then it’s the perfect soft landing.

U.S. stocks hit a record high today and have rallied on all but one day of the month. This is a sign of a market pricing in a perfect landing.

Inflationary concerns are not dead, however, and could cause problems again. I don’t think that will be the case and I think the problem will be more growth. This is being felt right now via weak ISM services and retail sales numbers (and maybe UMich if that’s your thing).

I believe the market can tolerate slower growth for a decent period from now: we’re still in a bad-news-is-good-news regime, but if weakness continues to set in, the market could rush and demand discounts. T3 or T4.

My main concern is that the markets are already ahead and we are behind us, especially in areas like US technology. I wrote earlier this week about Bank of America’s latest fund manager survey and some signs of a rush.

Others worry about the latest round of meme stock rallies as a sign of euphoria, but I remind readers that stocks didn’t peak until a full year after the previous GME/ craze. AMC. Still, the sentiment is certainly worth watching.


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