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Investors Should Remain Optimistic Despite Fed

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J.D. DURKIN: Are there big overarching reasons for optimism that perhaps we haven’t yet discussed for the next few months? I mean, we always talk, I mean, before we know it, we’ll be having this conversation it’ll be the heart of the holiday season. We traditionally have things like a Santa Claus rally and a bit of a pop to the indices late in the season. Is there a reason to have some forward looking optimism regardless of an announcement today from the Fed?

MARTIN BACCARDAX: I really think so. When you look at the performance of the U.S. economy, it has been incredibly resilient, given everything that’s been thrown at it over the past 2 to 2 and 1/2 years. I mean, you’re talking about a pandemic. You’re talking about a historic increase in domestic energy prices. You’re talking about record high gas prices. You’re talking about the fastest inflation in more than four decades. You’re talking about generational changes in employment movements and the fact that people are simply not returning to the office in any way that even closely resembles this stuff, the sort of action that we saw prior to the pandemic.

Yet and still, the economy is holding up reasonably well. Economic activity indicators for the month of August were pretty solid. Consumer spending is holding its own. Even with the increased prices, the job market has been tight and continues to be so and we’re looking at historically very low unemployment rates. So given all that, there is absolutely some reason for optimism. Company executives, they feel less so at the moment because I do think they want to see some of these inflation pressures play themselves through. And supply chains are still an issue. That was something that was articulated by Ford only yesterday. And that elicited the biggest fall for that stock in about 10 years. So that’s not to say that there isn’t speed bumps along the way, but the path of the U.S. economy has been reasonably smooth considering all of the things that we’ve just discussed. And that resilience, if anything else, is probably the most significant reason for optimism that I could find sitting here today.

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