In This Time of the Fed, Don't Try to Time the Fed
This has been a year of contradictions. The second quarter saw one of the strongest equity rallies of the past half century against the backdrop of U.S. GDP declines rivaling the worst of the Great Depression.
The volatility begets two temptations. The first is to dismiss market performance as a crapshoot. The optics certainly lend themselves to skepticism. The second is to try to unlock the secret of why the markets are performing the way they are. Armed with this special “knowledge”, you can get ahead of the markets to the tune of short-term gains.
I have written elsewhere that economic data and markets don’t necessarily move together. Economic data tend to look backward while markets tend to look forward. From employment levels to corporate earnings, to individual, corporate and government debt levels, to international trade, every economic metric is estimated to remain below end of 2019 levels through 2021.
The markets are bucking conventional wisdom
Conventional wisdom is that the market looks out six months. Through the lens of this conventional wisdom, the markets are behaving erratically. But...