The Most Unloved of Bull Markets – It’s all About the Trend, not the Peak
As the current expansion approaches its 100th birthday (measured in months), numerous market watchers are already predicting its demise. The most common cause of U.S. recessions and bear markets in the postwar era has been monetary tightening by the Fed as a means of fighting inflation. Today however, while the Fed is looking to continue to gradually raise rates (in a low inflationary environment), the prevailing news is that global activity has embarked on the strongest and most synchronized period of expansion since 2010. Many of the headwinds that had been suppressing global growth are now abating, implying that real interest rates may now be below the equilibrium rate, as secular stagflation begins to fade.