Don’t bet against the U.S. economy
Don't fight the Fed, goes the saying in markets. Traders might want to add a new maxim: Don't bet against the U.S. economy.
Despite endless warning of an inevitable recession, the U.S. economy defiantly expanded 2% in the first quarter of this year. It was pushed up by a rebound in exports, which rose 7.8% after falling 3.7% in the fourth quarter of 2022.
More significantly, consumer spending jumped 4.2%, the fastest quarterly pace since the second quarter of 2021 — back when households were still flush with cash from stimulus checks. I previously argued that the U.S. economy might just avoid a recession thanks to the strength of consumers — and it seems this latest data point corroborates that theory.
There are other signs the economy still refuses to buckle. Initial jobless claims for the week ended June 24 fell to 239,000, according to a report from the Labor Department. That figure's 26,000 lower than the previous week and well below economists' estimates, implying an unexpected improvement in the job market.
Meanwhile, stock markets rose after a banner day for big banks. The S&P 500 advanced 0.45%, the Dow Jones Industrial Average added 0.8%, but the Nasdaq Composite closed flat. All three indexes are on track to end the first half of the year at incredible numbers. So far, the S&P has gained 14.5%, the Dow's up 2.9% and the Nasdaq has popped nearly 30% and is heading for its best first half since 1983.
Can markets sustain that incredible momentum? The personal consumption expenditures price index, coming out later today, will provide some clues. It's the inflation gauge the Fed watches mostly closely, so if the PCE surprises with a hotter-than-expected reading, consecutive rate hikes might be on the way.
Still, given the resilience of the markets and the economy in the face of 10 consecutive hikes, perhaps they could continue surprising us as we head into the second half of 2023.
More significantly, consumer spending jumped 4.2%, the fastest quarterly pace since the second quarter of 2021 — back when households were still flush with cash from stimulus checks. I previously argued that the U.S. economy might just avoid a recession thanks to the strength of consumers — and it seems this latest data point corroborates that theory.
There are other signs the economy still refuses to buckle. Initial jobless claims for the week ended June 24 fell to 239,000, according to a report from the Labor Department. That figure's 26,000 lower than the previous week and well below economists' estimates, implying an unexpected improvement in the job market.
Meanwhile, stock markets rose after a banner day for big banks. The S&P 500 advanced 0.45%, the Dow Jones Industrial Average added 0.8%, but the Nasdaq Composite closed flat. All three indexes are on track to end the first half of the year at incredible numbers. So far, the S&P has gained 14.5%, the Dow's up 2.9% and the Nasdaq has popped nearly 30% and is heading for its best first half since 1983.
Can markets sustain that incredible momentum? The personal consumption expenditures price index, coming out later today, will provide some clues. It's the inflation gauge the Fed watches mostly closely, so if the PCE surprises with a hotter-than-expected reading, consecutive rate hikes might be on the way.
Still, given the resilience of the markets and the economy in the face of 10 consecutive hikes, perhaps they could continue surprising us as we head into the second half of 2023.
If inflation fell to 2% right now, did the Fed achieve a soft landing?
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我要你一鋪清袋 : The fed will have to decide whether they want a recession or to live with high inflation. They cannot have the best of both worlds. To chose the less of 2 evils, I go with let the inflation stay high!
SPACELIGHT : Don't bet.
efficentupup OP SPACELIGHT :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
efficentupup OP 我要你一鋪清袋 : Is everything predictable?
我要你一鋪清袋 efficentupup OP : No
71385498 我要你一鋪清袋 : High inflation, high interest rates, and high growth are always better than China's low inflation, low interest rates, and low growth
microbalance : This enacted system designed, managed, and policed to such an extent, where its purposes are extensive in the continuous processes of great matters to its public interest: to each individual citizen, and stretching beyond - into a national and international framework: a means to see fit all governing within itself and abilities, as well as providing protection and promotion of economic success and stability, through supervising established organizations and institutions within its body, will only achieve wellness with clear, realistic, fair governance. It must be reasonably transparent to those it serves, and allow for those it serves to be heard in a manner that builds trust. Without this, there is nothing that will be of benefit to either party. Independent decisions of direction with disregard to the basis of why the system was designed will certainly bring an undesirable end of the living functions which were meant to coexist.
SpyderCall : Last year was fears about the interest rate hikes. this year it the narrative is recession fears. As long as we have good economic data. In the US, then there is no fears of recession, so the market should climb.
But we should pay attention to a possible recession and other major economies. That would surely bring down equity prices in most world markets.
There are several countries that are currently in a technical relesson with at least two consecutive quarters of slowing growth.
I like to say, don't fight the trend rather than don't fight the fed or the US economy
Nase : It is fun to see how people can be optimistic when stock is up and fearful when it is down
Expendabiggles : US economy is fake. Smoke & mirrors. One day people will wake up. biden has destroyed everything.