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
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