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The Enduring Paradox Of A Bull Case Built On Rate Cut Hype
An equity rally built on expectations for aggressive rate cuts is inherently paradoxical.
If you're expecting meaningful central bank easing, you're expecting an economic slowdown almost by definition, and a corollary of a slowdown is weaker revenue and profit growth. Slower profits are bearish for ownership stakes in corporates and while this'll be news to scores of investors minted in the post-pandemic era, that's what stocks are: Ownership stakes in corporations. They aren't poker chips.
So
So either interest rate markets are wrong (once again) or analysts are going to be very busy over the coming quarter…
Either way is to fully employ financial pundits. You have alluded to insatiable thirst for twists and turns in the financial markets. I translate that to continued employment for financial journalists of all capabilities.
I am relieved that you counterbalance Andrew’s assessment with the nuance that he is predicting an outcome. We could do well with a multi-year melt up. Especially after enduring higher than average inflation.