On Another New Normal, Banks & Powell

With the growing economy set to benefit from interest-rate cuts and a weaker dollar, will inflation heat up again? We’re sanguine on the inflation outlook in the near term, but not as certain about the long run, which will depend on the outcome of November’s elections. In our opinion, the economy is normalizing from pandemic-induced distortions to a higher “norm,” meaning higher potential GDP, higher productivity growth, and a higher neutral interest rate. ... The economic backdrop should lift Financials stocks broadly, but large banks have more winds at their backs than small ones. … And: Why is Powell suddenly so dovish?