I normally don’t discuss the markets in the weekly blog, but current conditions warrant an exception. The Fed’s optimistic projections for interest rates are bullish for stocks. Offsetting this benign environment is the uncertainty of the upcoming election. I expect the short term to be rather choppy as investors oscillate between greed and fear. Current prices, particularly in technology, make the market vulnerable to negative surprises.
I am more cautious about long-duration bonds since there is little room left for yields to fall further. Those who are tempted to go long in anticipation of big reductions in bond yields are exposing themselves to significant disappointment. Conditions appear fine for those who have already made their investments, but we are very wary of taking new positions at this time.
There will be more details in the upcoming newsletter. Have a great weekend.