Time To Recalibrate Our Three Scenarios?

Expectations for more rate cuts this year than previously expected buoyed both bond and stock markets last week. The prior week was bad for both markets as rate-cut expectations diminished. But last Thursday’s comments by Fed Governor Waller that fueled the turnaround were wrong-headed, in our opinion. If inflation follows the course he expects down to 2.0%, the Fed’s dual mandate would be achieved so it wouldn’t need to ease further. … Upon reassessing our subjective probabilities for three alternative outlooks for the economy and markets, we’re sitting pat. Our base-case scenario (55% chance) remains the Roaring 2020s. … Supporting that scenario: Baby Boomers flush with wealth and spending it. … Dr Ed reviews “Nowhere Special” (+).