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An Uneasy, Untenable Calm
Are you still awake? Is this thing on?
It's easy enough to fall asleep on markets right now. Given what's going on in Washington, not to mention in Moscow and Kyiv, things should be exciting. Instead, we've settled into what feels a lot like a lull on some days.
But the rangebound trade in equities and conspicuous lack of fireworks belie high geopolitical drama, acute domestic discord in America and ongoing tension across the US banking sector.
"Complacent" may not be the right word. Folks
I’ve recently added to my list of market risks: malignant complacency.
“The equity market continues to expect the best of both worlds — rate cuts and stable growth.”
That would be a soft landing. Call me crazy but that, imo, is the scenario Jerome Powell is steering us to.
But NO rate cuts until we see two consecutive CPI prints below 3.5%
In the near term, investors might favor big, cash-rich, massively cashflowing companies whose revenues and operations have little/no exposure to the Federal government paying its bills or fully operating. E.g. mega-tech (but not exclusively).
In normal times of stress one would expect a flight to safety, I.e. USTs. But in this case, they aren’t safe and so neither is any bank account. So might as well leave my equities where they are.
I’m leaving everything the way it is except I’m reinvesting all my portfolio income every month.