March 2024

In Section I, we argue that the December FOMC meeting has caused the “soft landing” narrative to penetrate the psyche of “Main Street”, which is now impacting the real economy. But if a pickup in sentiment and growth works against the pace of disinflation on which expectations of rate cuts were predicated, then the economy has a “circular reference” problem. A true “no landing” scenario would likely prevent Fed rate cuts, which would cause a large hawkish shock. That would put pressure on equity multiples via both a higher risk-free rate and equity risk premium. In Section II, we ask what policies investors should expect if Donald Trump wins the 2024 Presidential election. The answer is that a second Trump term would be much less positive for risky assets than the first.