November 16, 2023

Welcome to the Year-End Rally

By Peter Bower

It took a little longer than usual to get here, but the year-end rally is on. It actually started in late October, but the CPI (consumer price index) report this week reinforced the trend – happy days!  No recession and declining inflation; what is there not to like?

There is still strong employment, consumer spending, and ongoing Federal fiscal support. After all, our government is spending $1.7 trillion more than it takes in, we have an Inflation Reduction Act, Infrastructure Bill, and a Chips Act that are all now funding projects. Investors finally understand the relevance of all this funding. It’s hard not to be optimistic about our economic prospects.

Amazingly enough, inflation is still declining. Inflation is the result of too much demand for a given level of supply. Too many economists and strategists forgot that inflation can be reduced by increasing supply, not just constraining demand. We are doing both and it is working. So where do we go from here? Higher is our belief. Not in a straight line, not without concerns and setbacks, but nevertheless, higher! Stay steady my friends.

The Lonely Bull