The US is suffering from painfully slow disinflation — but not stagflation

 Evaporating hopes for rate cuts haven’t hurt, because faith in the Fed Put remains


MORAL HAZARD MISCONCEPTIONS:

THE CASE OF THE GREENSPAN PUT

http://www.nber.org/papers/w24050

NATIONAL BUREAU OF ECONOMIC RESEARC


The Magnificent Seven have saved the day yet again 

Multiple things can be true at once. Bear this in mind when trying to explain what just happened in world markets. 

Briefly, US bond yields have surged to another new level,

Meanwhile, the stock market had a great week. The S&P 500 rallied 2.67% — its best performance since November.

So, investors are resigning themselves to a longer battle against inflation, while betting that the economy remains in good shape.

Financial Conditions are easy in large part because credit spreads — the extra yield over Treasuries that corporate bonds must pay to compensate for extra risk — remain remarkably tight.

It’s the Magnificent Seven that matter.

Earnings are 58.1% higher than at their nadir in November 2022. 

Meanwhile, the 493 companies in Bloomberg’s Large-Cap 500 Excluding Magnificent Seven index are on course to come in 8.4% below the estimate

John Authers Bloomberg  29 April 2024

https://www.bloomberg.com/opinion/articles/2024-04-29/magnificent-seven-slay-stagflation-but-the-earnings-season-ride-is-wild


 
After all, the Fed’s own forecasts don’t see inflation returning to the 2% target before 2026



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