Hweb, because interest rates at 5.25%-5.50%
The Fed vows to keep them there till we get core down to 2%. Core came in at 4.8% for June, 1% down from a year ago. I believe core will remain stubborn, which will keep the terminal rate around 5.5% or higher. At that rate, consumers will feel credit card bills more than normal, and I believe that will curtail spending. Plus, from what I am hearing, consumer savings are down to $500B, while it was at $2T about 18 months ago. Not to mention $500B in student loans that aren't being forgiven. Housing is a joke, as no one can afford a new one paying present rates, so few are selling their homes. The whole thing is a mess, and although the job market is strong now, it will inevitably wane in the coming months. If not, then the Fed will just keep raising till the job market weakens, and the higher rates will hurt everyone.
Hweb this market is smoke and mirrors IMO, and an inevitable recession will be here by early 2024 at latest. In the meantime, PEs are 20 in the S&P and 30 in the Nasdaq going forward, and investors think we're in a new bull market for reasons I can't understand. On the corporate front, companies are making less yoy, and S&P earnings have been $55/qtr on average for 2 years now. The only reason earnings haven't tanked is because of inflation spiking selling prices. So as the CPI comes down, companies have less pricing power, and paying higher interest expense yoy, and unless demand substantially increases, profits will trend down. Please explain to me, why this market keeps rising, while corporate earnings are trending down, the fed keeps tightening, and PEs are already through the roof
