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Buy The Dips: S&P 500 as Economic Activity is Booming

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D. H. Taylor
(@dhtaylor)
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Joined: 2 years ago
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GDP came in largely as expected: Far better than expected.  This is consistent with the rest of the data we’ve been seeing.  From this, the S&P 500 is up about 75 points (The Dow popped up over 500 points).  

At the same time, yesterday, Chairman Powell, of the Federal Reserve, stated that it will be a very long road to normalization.  I have consistently said this over the past 2-3 months as the market gears up for interest rate increases.  The Fed will normalize interest rates.  At best, that may mean an approximate 2.5% in short-term interest rates (The overnight rate) and, that may not happen for about 1.5 - 2.5 years.  During that time, inflation is likely to moderate as the year-over-year growth rates slow down.  Also, what if the supply chain reinvigorates and the beaks in the chain get back to work?  That has the ability to actually push inflation downward as more and more supplies hit the market.

Over the next 2 years, I will be continuously watching inflation and will continually be updating my position on this.  


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