“The Federal Reserve is paying attention to the bigger picture, and knows that a blind hike, coupled with substantially restrictive conditions, could put the economy on the brink,” says Callie Cox.
The #FED did not raise rates yesterday mainly because the bond market has done so for the institution. This should come as a relief to investors. The Federal Reserve is paying attention to the bigger picture, and knows that a blind hike, coupled with substantially restrictive conditions, could put the economy on the brink.
What's more, given all the pressure on the economy, it's very likely that the Fed's hikes are over for now. The labor market has shown cracks, and the Fed is now focusing on the risks to growth given rising inflation.
The #inflación advance shows that the Fed is still prepared for a soft landing, but don't jump to conclusions just yet. The economy remains under a lot of pressure, and a recession could still be on the horizon. If a recession occurs, be prepared for a steeper sell-off.
Still, we think investors underestimate the Federal Reserve's ability to help if the economy hits tough times. The Federal Reserve now has room to cut rates, and is more likely to do so if justified.
There are many reasons not to invest in this market. But there is also the risk of being left out (#FOMO ), and the odds of the worst-case scenario appearing lower than before, given the Federal Reserve's ability to support the economy. Look for quality companies that can weather a downturn without going out of business.
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