Edward Harrison

On four different fronts — income, credit, housing and inflation — the US economy gives one reason to be optimistic. For the time being expect growth above trend and for the Fed to cut rates even so. Here’s why.

Signs of financial distress among the most economically vulnerable are mounting enough to believe the Fed is ready to cut rates as soon as the data allow. Jerome Powell's commentary will help provide clues on the timing.

If you look at this business cycle, it doesn't seem long in the tooth having started in April of 2020. But a lot of the market dynamics are reminiscent of past late-cycle surges. And that means it's not to early to have a plan for how to invest for the next downturn despite the no-landing US economy even if you don't activate it quite yet.

The United States economy has outperformed other G-10 economies over the past year and that growth spurt looks like it will continue. But when you unpack this apparent US exceptionalism on the economic front, it’s only a recent phenomenon. The really exceptional thing about the US is its stock market.

The Fed’s view that recent high readings of inflation were part of a bumpy trip back to 2% inflation needs to be revisited. After another poor inflation number, rate cuts are on ice indefinitely, with the probability the Fed won’t be able to cut in 2024 at all rising significantly.

For the first time in nearly 60 years, the US government is attempting to effect fiscal stimulus to both increase social well-being and stave off geopolitical threats. That episode ended in high inflation. This time the guns-and-butter policy is global. And so, it makes sense to think inflation, and therefore interest rates, will remain somewhat elevated. How that will affect asset prices is not yet clear.

US equities have come under pressure of late as interest rates have risen. Even so, this mini-correction in stocks is likely to be short-lived as long as the US economy continues to grow above trend.

On FOMC decision day, it feels as if US central bankers' policy path has already been priced in. With bond losses likely capped, this might even be a buying opportunity. Earnings reports show equities shouldn't be under undue pressure, either. The risk, of course, lies in the potential pinch from above-target inflation — and higher-for-longer rates

On FOMC decision day, it feels as if US central bankers’ policy path has already been priced in. With bond losses likely capped, this might even be a buying opportunity. Earnings reports show equities shouldn’t be under undue pressure, either. The risk, of course, lies in the potential pinch from above-target inflation — and higher-for-longer rates.

Good morning. US stock outlook remains rosy. Apple sales surprise. Biden calls Japan “xenophobic.” Huawei funds research at US universities. Here’s what’s moving markets. — Isabelle Lee