22 Jun Fed Fueled Economy Continues
Stocks volatility has been high this morning, with stocks trending higher. Investors seem to be reliant on the current extraordinary level of support the US economy is receiving from the Federal Reserve. Although this is supporting both the stock and bond markets, it would be irrational to assume this will last long term. Eventually, the Fed will once again allow a normal cycle and recession. What the Fed is doing is ultimately providing a false sense of strength of the US economy, which in truth would fall hard if it was left to stand on its own in this environment.
With the current spike in Corona Virus cases, the global economy’s fragile recovery is a serious battle. If we continue to see cases climb, we can expect to see the travel and hospitality industries struggle as well as retail consumer shops. At this point, it is just too early to say for sure at what point we will see unemployment level out. However, so far it has been lower paid jobs that have been hit the hardest. This will continue to support the owner-occupied housing market, which is good news for home buyers.
We will maintain a locking bias.