Jack Janasiewicz offers his tactical take on the macroeconomic environment in this podcast recorded on May 4, 2023.
- Starting points matter. We are coming into a period of slower growth, following a fairly robust level of nominal growth. We can easily afford to trade some growth for lower inflation prospects in order to avoid a hard landing.
- On the inflation front, March CPI came in lower than consensus estimates, and while the good news didn’t stop there, the Fed’s job isn’t done yet.
- The pause in rate hikes has finally arrived, but the Fed is maintaining its hawkish bias. We don’t expect a pivot.
- Corporate earnings season is well under way, and companies across almost all industries are reporting the same thing: Operating margins are holding up just fine, thanks to aggressive cost cutting and a two-year head start to prepare for changing economic conditions.
- Many of the headwinds of 2022 have shifted to tailwinds in 2023. Tight supply chains have continued to normalize, and an improved China demand outlook and fading energy pains in Europe have provided a better global growth backdrop for multinationals.
- The data right now is not indicative of a sharp slowdown and the stock market may very well have already discounted any earnings recession. Time will tell.
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