Is The Fed Asleep At The Wheel… Again?

The good news is that we should not fear an imminent US recession. In the absence of a recession though, the Fed cannot cut rates as aggressively as is priced if it wants to keep inflation and inflation expectations anchored at 2 percent. This means that for stock markets the real risk is not a profits recession, the real risk is a valuation recession. We go through the investment implications for stocks, bonds, and currencies. Plus: we explain why, somewhat counterintuitively, gold is a tactical short.