Chief Market Strategist Brett Ewing’s latest thoughts on recession fears and the current risk of a housing crash, as well as his outlook on the Fed and markets, are below.
In part, he says, “If a recession is coming, it is perhaps the most telegraphed recession in history. We feel confident the market is doing a good job of pricing it in. Consumers’ actions aren’t matching their words as they continue to spend like they aren’t actually worried about a recession. If employment holds up, then so should consumer spending—this will be the year of revenge for spending on services.
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"People are overly bearish on housing—this isn’t 2007, and we believe mortgage rates are topping."
Economy
If a recession is coming, it is perhaps the most telegraphed recession in history. We feel confident the market is doing a good job of pricing it in.
Consumers' actions aren’t matching their words as they continue to spend like they aren’t actually worried about a recession. If employment holds up, then so should consumer spending—this will be the year of revenge for spending on services.
People are overly bearish on housing—this isn’t 2007, and we believe mortgage rates are topping.
The Fed
We believe we are at peak hawkishness in regard to rates and what the market is pricing in—jawboning no longer moves markets as it completely shrugged off Bullard earlier in the week.
If the consumer can hold out for the next 3-4 months, the stagflation argument will lose steam.
Markets
We believe the bottom is in for at least the short to medium term.
Despite rate breakouts this week, indexes have held up well and most have moved higher.
We believe there are several small to mid-cap growth companies that have been hit due to factor selling that are babies being thrown out with the bathwater.
Our year-end price target for the S&P 500 is 5150.
