Mind of the market

You can sense the commentariat arm of the market wanting to get very nervous and sell-first-ask-later about the US retail sales data. The trend does seem pretty clear, i.e. declining, but no different to the other data points whose moderation we are celebrating (wages/inflation)…

…nor are these things independent, either. So, in terms of distinguishing are-we-soft-landing or are-we-hard-landing, well, you can’t, yet. You’ve got to make your bets, of course, and the slowdown now, is the only way to a higher market, later, via the Fed/inflation/rates.

So, either this is the hard landing, in which case our medium duration government bonds will do well, whilst the stocks do poorly, or, it’s the soft landing, in which case we squeak through with, one hopes, the goldilocks equivalent of rates come down because inflation comes down but demand stays strong enough to keep corporate profits and risk appetites up.

As long as you aren’t “all in” on one particular theme, things should be fine either way.

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