Financial information launched final week means that the economic system is progressing at a wholesome tempo,
“I might even name it a ‘Goldilocks’ tempo,” Siegel mentioned. “The information isn’t too robust to encourage the Federal Reserve to tighten and positively not too weak to start out a slowdown in company earnings.”
The Center East battle and the hazard to cargo ships within the Crimson Sea have pushed oil costs up and will result in different provide chain delays, producing inflationary stress, Siegel wrote.
“However to date these tensions are solely impacting oil,” he mentioned, “and we see no indicators in different commodities, which have been steady if not declining.”
Siegel mentioned he disagrees with those that suppose the Fed must make six price cuts this 12 months to have an excellent 2024.
The important thing level from the current Federal Open Market Committee assembly was Jerome Powell, the Fed chair, being extra versatile and prepared to chop charges on financial weak point, he mentioned, including, “If actual financial development stays robust, the Fed might maintain charges precisely the place they’re, and we might have robust fairness markets.”
Powell’s flexibility lowers the likelihood for recession and raises probabilities for continued development or a softer touchdown, Siegel wrote. An inflation flare-up might flip the economic system extra detrimental, “however I believe the prospect of that’s low.”
(Picture: Lila Picture for TD Ameritrade Institutional)