28 Oct: Column: ‘Halloween Nightmare Of Policies, Tax’.For now, that does not appear to be an immediate concern, but we are always on the look out. The worry, of course, is what happens when the bears come home. Employment is at record levels and, despite some weakness in the manufacturing sector, GDP growth has been good.
Inflation remains contained and the Federal Reserve has been accommodative on monetary policy. This reference is carried over as a metaphor for the economy when economic conditions aren’t so hot that inflation and rising interest rates are a worry, but also that growth is not anemic where one would worry about an imminent recession. Similar to the fairytale when Goldilocks tastes the porridge in the bear’s house, the baby bear’s porridge wasn’t too hot and it wasn’t too cold, it was “just right”. You may have seen some financial headlines this past week referring to a “Goldilocks Economy”. For the coming week, 88 companies in the S&P 500 are scheduled to report earnings. Current expectation is for a 0.8% decline in year/year earnings on 3.7% revenue growth versus last week’s consensus of a 2.0% earnings decline on a 3.4% increase in revenue. Of the 356 companies that have reported 3Q earnings, 76% have exceeded expectations, 8% have met expectations and 17% have reported below expectations. This is explained below on our Dissecting Headlines section. is experiencing what is sometimes referred to as a “Goldilocks Economy”. With low interest rates and strong employment, the U.S. The interest rate announcement was followed later in the week by a better than expected employment report for October. The Federal Reserve lowered its short-term target rate by 0.25% to a 1.50% to 1.75% range.This is the third interest ate reduction of the year and, in our view, probably the last that is needed unless economic conditions worsen. These along with good third quarter earnings reports pushed the S&P 500 into record territory.
Lots of positives stacked up this past week with the Fed lowering short-term interest rates by 0.25%, a stronger than expected employment report, and continued progress on U.S.
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