- 2022 was a year in which an almost universally held opinion abounded: Fed tightening meant a recession (with many predicting Q2 or Q3 ’23).
- 2023 began with some astute observers recognizing the fears associated with tighter monetary policy were unfounded, at least from a 6-month forward looking perspective. In particular, the labor market remained strong and balance sheets were not eroding in a systemic manner.
- Naturally, the direction of least resistance shifted dramatically to the upside, which was shored up when the Fed intervened in the regional bank crises and AI took front and center stage.
- We are now nearly halfway through Q3. Until the labor market begins to deteriorate materially, cash balances on the sidelines become strained, and bearish sentiment subsides, it is likely this market continues higher.
