May 10, 2023
Weekly Market Outlook
By Donn Goodman and Keith Schneider
We are now faced with stagflation. The dreaded economic condition that causes consumer prices to stay elevated, a tight employment market, and basically slow or NO growth for the economy.
It is likely interest rates stay higher for longer and no pivot anytime during 2023. In fact, given where inflation is today and how “hot” the employment market is, it is highly conceivable that the Fed hikes 1-2 more times during the next 6 months.
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Last week’s news headlines gave proponents of both sides of stagflation and the Fed what they needed to hold on to their beliefs – high inflation, low growth, and restrictive monetary policy.
The abundance of news led to plenty of volatility in the markets, but left them relatively unchanged for the week.
As usual, the more interesting news was beneath the headlines.
For example, according to corporate CEO’s, we are experiencing a credit crunch. Rates have become restrictive for corporate America and are heavily affecting smaller companies. This has shown up in the performance of small cap stocks. This should weaken the economy further and put pressure on employment. See chart below:
These execs aren’t just talking about a credit crunch. There’s plenty of data that demonstrates they’re experiencing it.
Click here to continue reading to discover:
- The biggest surprise in the jobs report
- Which way rates will likely go from here
- Insight into bank lending trends
- What to expect in May
- An update on earnings season
- And more
The news flow can be confusing and intimidating, but investing in this environment doesn’t have to be.
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