U.S. stocks gave back a portion of last week’s strong gains after St. Louis Fed President James Bullard, typically a “hawkish” policymaker, appeared to dampen hopes that inflationary pressures had peaked. “The idea that inflation has peaked is…not statistically really in the data at this point,” Bullard asserted in an interview.
When is the bad news of inflation actually good news for investors? It's when an oncoming recession appears likely to push interest rates down and crush problematically high inflation. Recessions have a cleansing effect on inflation, debt, leverage, and excessive exuberance.
Over the past year nearly every essential good or service has escalated in price, but for those renting, costs have often skyrocketed.
The popular definition of an economic recession has traditionally been “two consecutive quarters of negative real gross domestic product (GDP) growth”, but economists at Bank of America’s Global Research team aren’t expecting an official ‘recession’ call anytime soon. They note that the National Bureau of Economic Research (NBER), which is the official arbiter of recessions, doesn’t use that “popular definition”.
While the trendlines continue to slope downward, we will continue to use any rallies to raise cash, reduce risk, and rebalance allocations accordingly. We will continue focusing on keeping market losses relatively small until the slope of the red channel flattens out and the bottoming process can begin. We trust our market indicators to help us determine market direction and guide us in our measured response to changing market conditions
It’s not just housing—the average transaction price of new vehicles sold in June hit a new stratospheric record high of $45,844, up 14% from a year ago. As automakers continue to struggle with shortages of key parts and semiconductors in particular, inventories remain near historic lows.