Wall Street’s insistence on clinging to the past is about to screw over a lot of investors
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Wall Street desperately wants the stock market to go back to the good ol’ days. You know, like during the pandemic, when interest rates were at zero, the government was mailing checks everywhere, and it seemed everyone had so much real money, they were using it to buy fake money. In that environment, any idiot — or anyone on Wall Street — could buy almost any asset, sit back, and watch its value increase. Stocks didn’t just go up, they soared.
Wall Street has even concocted a fairly convincing story for how the market will get back to this state: The Federal Reserve’s rapid interest-rate hikes will cause the financial system to seize up, they will blow holes in the real-estate sector, and layoffs — which have already hit industries like tech and media pretty hard — will spread across the economy. This will, in turn, usher in a recession that forces the Fed to reverse course and cut rates to juice the economy again. After a few months of turmoil, the market will settle back into the low-interest-rate environment that defined the pre-pandemic decade and stocks will be on cruise control once more. A return to normalcy.
Buy these 52 top stocks now before a multi-year market recovery begins, according to BMO Capital Markets
The days of low interest rates that allowed growth stocks to take off are over, according to BMO.
Value names will outperform as a new bull market kicks off, the firm’s strategy chief said.
Here are the 52 best investing ideas from BMO analysts in the first quarter of 2023.
A three-year stretch of chaos in markets will soon end, according to BMO Capital Markets.
Stocks have swung from feverish highs to crushing lows since the pandemic as interest rates rose from rock-bottom levels to historically high. That made money harder to come by, which unwound a once-in-a-generation rally for fast-growing companies and other riskier assets.
Though the era of easy gains for stocks is over, that’s not necessarily bad news for investors, wrote Brian Belski, BMO’s chief investment strategist, in a recent research report.
“The great unwind toward normalcy has begun,” Belski wrote. “But the news is not all dire. In fact, we believe this ‘great unwind and return to normalcy’ is actually very good news — with some bumps and bruises along the way.”
In this new normal, BMO believes that careful stock selection will be crucial. Unlike in the 2010s, investors shouldn’t count on index funds to deliver steady gains while growth and rates are low.
“We believe the reality of a higher-than-zero interest rate scenario, single-digit earnings growth, a moderation of valuation, and historical average stock market performance will spawn more active stock-picking strategies defined by bottoms-up characteristics instead of macro,” Belski wrote.
Expect a comeback from last decade’s losers
Naturally, a dramatically different investing landscape should produce a fresh set of winners.
Value stocks now appear to be at the start of a strong multi-year rally after they trailed their growth-focused peers for the better part of a decade, Belski wrote. The same is true for small- to mid-cap companies, which long lagged behind their large-cap counterparts.
However, those gains may not come easy. Belski reiterated his call for choppy performance for markets in 2023, especially since the risk of higher interest rates hasn’t fully been priced in.
“The market is likely to experience periods of heightened volatility (in both directions) during 1H23 until overall levels of inflation trend down closer to historical norms throughout the second half of the year,” Belski wrote.
For patient investors, volatility should present buying opportunities. If Belski is correct that the S&P 500 won’t fall back to its mid-October low, then the new bull market is already underway.
52 top stocks to buy now
In the report, dozens of BMO analysts listed 52 of their favorite stocks across nine market sectors to buy this quarter. Below are the top investing ideas from BMO, along with each company’s ticker, market capitalization, sector, price target, and thesis.
Thesis: “Base Carbon was developed to be a preferred partner for carbon projects, providing capital and development resources to projects involved in the voluntary carbon market (VCM) and broader ESG economy. The company remains one of the few ways to invest through public equity in the VCM, which we believe is slated for impressive growth.”
Thesis: “Canadian Natural boasts one of the lowest cash breakeven oil prices amongst its peer group due to its industry-leading operating performance, cost structure, scale, and commodity diversification. We believe this attribute should allow Canadian Natural to increase returns to shareholders at a faster and more consistent pace than many of its peers.”
Thesis: “SLB is our top OFS [oilfield services] pick as we prefer greater international leverage this upcycle, with momentum expected to continue in 2023+. We believe upside exists to SLB’s guided >15% Y/Y revenue growth, while EBITDA growth is expected to be mid-20%. Middle East and offshore spending growth is only just beginning to inflect higher, with SLB well-positioned to provide differentiated outperformance in this multi-year upcycle.”
Thesis: “With political and fiscal clarity in Colombia moving forward, we view Parex as a catalyst-rich story with three high-impact exploration wells expected near- to mid-term that have transformational potential. The dividend is currently yielding 6.5%, and we estimate the company can buy back 10% of its shares (for the fifth consecutive year) within excess free cash flow at $85/bbl Brent.”
Thesis: “EFX’s Q4/22 results (its first as a combined Enerflex/Exterran entity) were strong and demonstrated the pro-forma company’s potential moving forward. Near-term leverage remains elevated and creates some risk for investors, although we feel the shares hold upside over the longer term as the proforma business is proven, which should result in multiple expansion.”
Thesis: “In 2023, LIN should see robust price/vols, gains from efficiency, new projects coming online, and tailwinds from a normalized energy/power cost environment that all drive earnings toward/above the higher-end of its double-digit EPS growth range.”
Thesis: “OceanaGold currently holds an attractive relative valuation compared to industry peers, and with a successful production ramp-up at the Haile underground mine we believe there is strong upside potential for the re-rating of the stock in the near term.”
Thesis: “Barrick’s clear growth focus should leave the market with few surprises about the company’s long-term strategy. Barrick continues to have limited downside risk with more incremental positive news flow and optimization this year (versus disappointment) and by laying out a clearly variable dividend.”
Thesis: “In the near term, we think there is modest upside potential to Azek’s FY23 guidance. Among the key drivers are: 1) Sell-through in the Residential segment is off to a better-than-expected start. Azek is seeing MSD drop in sell-through vs. FY23 guidance of -10% y/y. 2) Pointing to channel inventories at/below normalized levels. 3) Expects to meet/exceed $30mm cost deflation target.”
Thesis: “BHP is our top pick amongst the diversified miners, offering an attractive mix of cash-generation and commodity exposure including copper, iron ore, coking coal, and thermal coal.”
Thesis: “Capstone’s diversified portfolio of producing mines separates it from peers. Capstone is expected to generate strong cash flow and, supported by the company’s balance sheet, will provide the potential to pursue additional value-enhancing opportunities.”
Thesis: “We view CTVA as best-in-class among ag/ferts stocks for compelling multi-year double-digit EBITDA CAGR and margin expansion. This as both seeds and crop chems have positive drivers amid movement to a more-streamlined operation that has been desired for years.”
Thesis: “We believe DPM offers an underappreciated investment opportunity given its discounted valuation. The company has a consistent operational track record and solid balance sheet along with a peer-leading near-term FCF profile (2023 FCF/EV yield ~20%).”
Thesis: “Well-positioned for low-risk, near-term growth in copper, which builds on Ero’s successes in minelife extension and asset optimization to date. Beyond the near-term growth at Tucumã, Ero’s assets boast significant optionality, which the company continues to pursue, and which we expect will drive the next waves of growth.”
Thesis: “Wesdome operates two high-grade underground mines in Ontario and Quebec. The company has a meaningful production growth profile, and after an operationally challenging 2022, we expect the shares to begin to re-rate as the company advances the recently restarted Kiena mine towards full production levels.”
Thesis: “We are confident that the agricultural-equipment cycle has several years to run, and that AGCO is the best way to participate in what looks to be an enduringly strong upturn. This strength is being augmented by AGCO’s refreshed product portfolio and budding precision agricultural technologies.”
Thesis: “Still long runway for passenger travel demand recovery. We estimate that broader consumer and corporate expenditure on air transport (inflation adjusted) remain below 2019 levels. We expect demand will expand in 2023 to ~10% below 2019 levels, up from roughly 29% last year, with further growth runway into 2024.”
Thesis: “CNR operations are at their best level since 2016, with the company focused on improving revenue quality and asset velocity under new CEO, Tracy Robinson. We believe that management aims to improve adherence to PSR principles, improve service and pricing, and ensure greater collaboration between marketing and operations, which has lacked in recent years.”
Thesis: “Demand is expected to be strong in Finning’s territories over the intermediate term, and the company has meaningful market share growth opportunities in product support and South American mining. Recent financial performance has benefitted from the multiyear effort to improve execution and cost performance that we believe has meaningfully lifted the earnings power of the business.”
Thesis: “CPRI is one of our top ideas, having reset the bar with a FY guide that we expect to prove conservative, setting up a year of beat-and-raise quarters for one of the few companies explicitly committed to maintaining price (even at the expense of volume). We believe CPRI at ~$50 with a $6.40 EPS bar is very compelling. It still trades at a meaningful discount vs. peers despite material self-help-driven earnings upside potential.”
Thesis: “Although investments pushed out earnings expectations, fundamentals remain strong and earnings growth is at an inflection point. We see upside to expectations over time owing to the strength of the US and eventual recovery in China.”
Thesis: “Retail demand in the marine market continues to be solid, with strength in the high end — the area of the market that BC primarily caters to. We also see channel fill opportunity in large fiberglass boats and outboard engines that, along with stable P&A sales, should help the company mitigate the effects of a broader slowdown in consumer spending.”
Thesis: “Linamar is a high-quality, mid-cap auto parts company that we believe will participate in the outperformance of the auto parts sector we are predicting. In addition, the forward earnings prospects for auto parts companies are impacted by the outlook for vehicle production volumes. Over the last few months, the outlook for vehicle production volumes has stabilized, which should be positive for Linamar over the short term.”
Thesis: “Stride is the largest operator of US virtual public schools through its General Education business. While there was clearly a pandemic-peak, we believe enrollment has troughed and will grow from here. Its Career Learning segment, which provides skills training, should be a growth driver for the company with potentially higher margins than its General Education business.”
Thesis: “In the challenging Canadian rec market, VFF appears to continue to buck the trend. Q3/22 results were strong as a result of sustained demand for existing products. VFF’s cannabis segment continues to generate positive EBITDA, a rarity among Canadian LPs. We can see a pathway to modest +EPS and +FCF in 2024 and continue to believe the stock warrants a higher multiple (our target: 3x) than current levels (1.3x).”
Thesis: “We believe Walmart’s F2024 guidance will prove conservative, especially given current trends, and are highly encouraged that management noted the model was at an inflection point to accelerate margin expansion. We continue to believe that as WMT moves past and cycles the nonstructural challenges of 2022, investor focus will return to higher-margin initiatives where further catalysts and disclosures could come during WMT’s investor day in April 2023.”
Thesis: “We have more confident expectations for Mounjaro in T2D given rapid uptake since June 2022 launch, and large opportunity in obesity, with potential approval in late 2023 / early 2024. Lilly’s share premium (37x 2023E EPS vs. 17x peers) has shown durability in a challenging market, reflecting confidence in the company’s metabolic franchise anchored by Mounjaro.”
Thesis: “We believe IONS has a very underappreciated pipeline with multiple shots on goal and overall good risk/reward across its robust RNA platform that has considerable value.”
Thesis: “IMGN’s first commercial product, Elahere (mirvetuximab soravtansine), gained accelerated approval in 4Q22 in ovarian cancer and we continue to view IMGN as significantly undervalued based on 1) our level of conviction for the 2Q23 readout of the Phase 3 MIRASOL trial, which will enable full approval of Elahere in the US as well as filings for approval in Europe and China; 2) an opportunity in ovarian cancer that is underappreciated by the Street; and 3) pipeline optionality not reflected in the stock at these valuations.”
Thesis: “4DMT develops differentiated gene therapies harnessing its directed evolution platform that is based on a Nobel Prize winning technology and has been clinically validated through 4DMT’s five clinical programs.”
Thesis: “Our positive outlook for Regeneron is based on confidence in high-dose (8mg) aflibercept as a leader in the increasingly competitive wAMD space. We believe the strong data validates the company’s approach to lifecycle management, extending the broader franchise.”
Thesis: “Today ~90% of APO’s earnings stem from highly visible FRE (from its Asset Management business) and SRE (from Athene). Significant investments in proprietary asset origination are supporting record organic volume growth at Athene, with strong associated credit quality, while Athene’s profitability is also expanding due to rising rates and wider credit spreads.”
Thesis: “The price of BN’s stock is fundamentally disconnected from value, in our view, with the investment portfolio trading at a 25%+ discount to our target. Potential catalysts to unlock value include 1) the consistent realization of carried interest; 2) reduced capital intensity; 3) the return of capital via shareholder distributions.”
Thesis: “We recommend COF shares on valuation, after COF distinguished itself among US banks and specialty lenders by building loan loss reserves prudently in 4Q22, well ahead of the impending consumer credit cycle. COF is a fully deposit-funded diversified lender; as such, it is worthy of a valuation multiple on par with domestic regional banking peers.”
Thesis: “Goeasy continues to deliver on 1) growing loan receivables; 2) having access to low cost of capital; and 3) containing credit losses. GSY remains one of our best total return ideas, underpinned by ~20% earnings CAGR potential and 22%+ ROE valued at 9x earnings.”
Thesis: “We recommend NVEI shares on valuation; NVEI’s +20% annual organic revenue growth potential implies a fair value of 31x rolling two-year-forward P/E, and yet shares trade at only 10x. Consequently, our growth-derived target price implies that NVEI shares could more than triple in value. Meanwhile, NVEI remains a highly profitable organic market share gainer among digital merchant acquirers globally, with a strong balance sheet to enable further accretive acquisitions.”
Thesis: “Traditionally FFH’s heavy reliance on investment gains to drive EPS/BVPS growth has given us pause. But going forward we see EPS/BVPS growth driven by much more reliable sources (strong underwriting income on hard market conditions, stronger interest income as FFH puts its cash to work, rebounding earnings from associates/subsidiaries on improving market conditions), which improves earnings visibility and gives us more confidence in the EPS/BVPS growth outlook.”
Thesis: “We believe Boardwalk is best-positioned vs. its Canadian multifamily peers to drive top-line growth in 2023 due to its significant weighting to strong markets (AB and SK) that are not subject to rent control. Boardwalk should also be somewhat resilient to operating expense inflation over the next several quarters owing to its low-cost natural gas hedge book and continued focus on internal efficiencies.”
Thesis: “We believe DLR is well-positioned, benefitting from record leasing levels driven by robust hyperscale demand that is pushing down vacancy rates and meaningfully improving the pricing narrative and DLR’s 2023 releasing spread outlook of 3%+ is its best in nearly ten years. Revenue growth visibility has also improved, with DLR’s backlog as a percentage of annualized rent at 13%, well above the long-term average of 7%.”
Thesis: “We remain bullish on the SoCal industrial market given the favorable supply/demand imbalance, driven by the desire to improve supply chains and inventory levels, and ecommerce demand. REXR’s +52% leasing spreads and +73% portfolio mark-to-market should continue to drive near-term earnings growth as leases continue to rollover.”
Thesis: “We remain bullish on the needs-based, multi-year senior housing (SH) recovery post-COVID with a leading demographic portfolio, driven by a growing and aging population with limited supply. SH has exhibited stronger-than-expected pricing power with labor costs pressures starting to abate. We also expect significant SH consolidation opportunities to favor WELL’s disciplined & strong management team with a solid balance sheet.”
Thesis: “Over the last few years, AMD has continued to build on its compute franchise. AMD has achieved this via a combination of factors ranging from architectural innovation, its partnership with TSMC, and superior execution on its roadmap. The company has gained share against its rival Intel, most notably in the important data center market.”
Thesis: “Calian offers strong defensive qualities in technology amidst rising macro risks, in our view. This includes diversity across four distinct businesses, a 20-year track record of profitability, 15 years of dividend growth, and a highly accretive growth-by-acquisition strategy. This has led to 18% revenue growth (8% organic), 27% EBITDA growth, 810 bps gross, and 300 bps EBITDA margin expansion and 12% average ROIC over the last five years.”
Thesis: “Constellation is our Best of BMO pick given the uncertain economic backdrop. The business has demonstrated its resilience through prior downturns, due to a high mix of recurring revenue; a very high level of diversification across different geographies and end markets; and the fact that much of its software is mission-critical (rather than discretionary) for the customers that use it.”
Thesis: “PANW remains our top pick and has been our lone top pick since September 2021. First, we expect security spend to remain largely durable against ongoing macro headwinds, and we think security will remain a top priority for organizations. We believe that the elevated threat landscape continues to raise the importance of having robust security capabilities.”
Thesis: “Workday is a core beneficiary of digital transformation in enterprise back office software, which is advancing at a reasonable pace despite an uneven macro backdrop. We see a multi-year high-teens growth runway, reflecting low/mid-teens-like growth in the scaled HCM business and further gains in the financial suite driven by renewed momentum in mid-market and key industry verticals.”
Thesis: “TELUS is our top pick in the sector based on superior operating metrics and attractive growth prospects. TELUS has a solid path to material increases in FCF in 2023 and 2024 after completing its accelerated fiber build. The company has strong growth potential from recent acquisitions and its diversified asset mix through TELUS International, TELUS Agriculture, and TELUS Health with the potential for future asset monetization.”
Thesis: “We continue to favor AltaGas’s premium infrastructure assets and rate the shares Outperform based on: (i) attractive valuation at ~12x P/E (vs. ~16.5x for utility and ~15.5x for pipeline/midstream); (ii) upside to EPS is still possible with robust demand for LPG exports (10% CAGR), iii) near-term debt reduction following the $1.1B sale of the Alaska gas utilities should result in leverage moving towards the 5x net debt/EBITDA target and potentially lower if more non-core assets are monetized (~4.5x long-term target); (iv) 5-7% dividend growth through 2027; and (v) likely near-term certainty around the new CEO (appointment expected 1H/23).”
Thesis: “Trading at low single-digit relative P/E discount to its regulated peers, EXC shares continue to anchor the GARP/Relative Value side of our BMO Utility Barbell strategy given its attractive relative valuation. As management executes its regulated growth strategy over the next 12-18 months we believe this will catalyze a rerating of the stock towards a premium multiple and supporting a 15% total return potential.”
Thesis: “SEDG offers investors exposure to an attractive combination of upside from current robust European distributed solar generation growth and longer-term upside from U.S. manufacturing tax credits for solar inverters that we believe remains underappreciated.”
Source: BMO Capital Markets
53/53 SLIDES
There’s only one problem with Wall Street’s story: It’s completely backward.
“I think one of the great mispricings of the markets right now is the idea that we’re going to cut rates by the end of the year,” Justin Simon, the managing director of the hedge fund Jasper Capital, told me. “For that to happen we’d have to have a crisis, and I don’t see that.”
Consider instead what the world would look like if higher rates don’t break the US economy but just bend it into a different shape. In this scenario, growth persists, albeit at a slower rate. Consumers keep pulling their weight, and we don’t have a recession. There is pain in some pockets of the economy and inflation remains a concern — but there’s no immediate crisis that forces the Fed to reverse course. In this scenario, the stock market gets choppy. Some stocks will win and others will lose. Charts will look ugly. The market may go sideways. Wall Street’s stock pickers may have to sweat a bit to make their clients happy.
“There’s going to be a slowdown here and an acceleration there,” one legendary fund manager told me, “but it kind of feels like the economy is just grinding on.”
It may be less convenient for Wall Street, but the reality is that our new inflation era is by no means over — and that’s not a terrible thing. Cutting interest rates to zero was a move made to revive an economy on the brink of death. It was a pull-in-case-of-emergency valve that we pulled for so long that now it feels normal to Wall Street. It’s not. Keeping rates low in a healthy economy is like pushing an able-bodied 9-year-old kid around in a stroller. Sure, you can do it, but at a certain point you have to accept the fact that the assistance is starting to stunt their development. Or, as one family-office head put it to me, if the Fed has to resort to rate cuts to stabilize the economy that means we’ve all “become a bunch of pansies who can’t handle real estate or stock declines, and think that asset prices only go up and to the right.”
As unsettling as the bank failures and stock plunges we’ve seen over the past year can be, they are a part of capitalism, not an aberration. When circumstances shift as violently as our economic regime just did, heads will roll. And while that may make the lives of Wall Street investors a bit tougher, that doesn’t necessarily portend collapse for the rest of the economy — it’s just the start of something new.
Going backward would be a bad sign
The pandemic made the economy so weird it’s hard to tell exactly what’s coming next, but that hasn’t stopped Wall Street from trying. Every quarter, analysts warn that the recession is just around the corner — just wait six months, it’ll hit. Some even argue that the recession is here and we just haven’t seen it, like a family ghost or a sock lost in the laundry. Despite this constant caterwauling from Wall Street, Americans are working, spending, and helping the economy defy doom-and-gloom forecasts.
Earlier this month, the San Francisco Fed calculated that consumers still have $500 million in savings left over from pandemic stimulus and spending changes. In another recent Federal Reserve survey of more than 11,000 Americans, most people were downbeat on the overall economy, but when they were asked about their own personal financial situation they seemed less worried — 73% of the people surveyed told the Fed they were “doing okay or living comfortably financially,” and 63% said they could cover a $400 emergency if they needed to, near a record high for the 10-year-old survey.
We currently see no signs of change in customer behavior, no indication that customers are shopping less frequently, buying pure items, or trading down Richard Hayne, CEO of Urban Outfitters
Helping to support Americans’ solid financial situation is a strong job market. The latest monthly payrolls report showed that the US added 253,000 jobs in April and the unemployment rate tied the record for the lowest since 1969. The number of people claiming unemployment insurance also remains near 40-year lows. And there are still plenty of jobs that remain unfilled. In April — when the most recent data released — job openings rose to their highest levels since January.
A strong labor market and healthy household balance sheets mean that consumers haven’t stopped spending. Given the fact that consumer spending makes up nearly two-thirds of the US economy, it’s hard to imagine some sudden economic collapse while Americans are still willing to pull out the credit card. Retail sales increased a respectable 0.4%. Auto sales, which had been sluggish during the pandemic due to supply constraints, are starting to pick up. At most, Americans have adjusted their habits, buying cheaper products or delaying big purchases. The economy is changing, and consumers are changing with it. That’s what executives at stores like Walmart and T.J. Maxx are seeing in their sales. There are even signs that some consumers haven’t changed one bit. Over at Bloomberg, Joe Weisenthal has been highlighting executives who are telling investors that if a recession is coming, no one has informed their customers.
“We currently see no signs of change in customer behavior, no indication that customers are shopping less frequently, buying pure items, or trading down,” Urban Outfitters CEO Richard Haynes said on a recent call with investors.
Back in 2009, policymakers set interest rates at zero hoping that eventually the US economy would be growing strong enough to withstand higher rates. Well, that dream has come true. The US consumer is pushing through higher rates and high inflation. It’s all happening in circumstances and at a speed no one expected — and at a time that just might not be convenient for stocks.
A choppy new world
Since the start of 2023, the stock market has been high on AI-driven hype and hopium, convinced that everything will go back to the way it used to be. The old market winners who dominated the low-interest-rate world are reversing their 2022 losses. The tech-heavy NASDAQ is up 30% and the S&P 500 has returned about 8%. When trades are made and portfolios are structured for a specific environment, Wall Street has a way of convincing itself that past performance is, in fact, an indicator of future returns. But the coast is not clear.
A resilient US economy seems like it would be a good thing for the stock market, but it also means that Wall Street consensus is treating higher rates as a temporary bout of strange weather, when they are actually a change in climate.
This new normal would defy Wall Street’s expectations and bring about a period that, frankly, is not as fun for stocks as the last one.
Inflation could stick around as strong consumer spending allows companies’ to keep prices high without losing business. A world where the Federal Reserve has to keep one eye on inflation means keeping rates higher for longer. That’s a world where savers can have a leg up on spenders and where it’s more expensive to borrow money. And the logic of investing changes: If investors can make a guaranteed 5% return investing in 10-year Treasury bonds, they’ll be less likely to put their money in a startup or venture fund that may not see returns for a decade. Highly leveraged institutions will run the risk of blowing up, so corporations will be more careful with their spending as well. Sectors with business models that rely on debt — think: commercial real estate and private equity — will experience implosions as time goes on. Torsten Slok, the chief economist at Apollo Global Management, referred to this future as a “non-recession recession.”
“The 15 years of money printing created a significant bubble in asset prices,” he said in an email to clients earlier this month. “As a result, the big correction during this recession will not be in the economy but in asset prices as the Fed continues to deflate the buy-everything bubble created due to global easy money.”
This new normal would defy Wall Street’s expectations and bring about a period that, frankly, is not as fun for stocks as the last one. The pandemic era produced back-to-back years of record corporate earnings, but now wage inflation, a more price-sensitive consumer, and higher borrowing costs are set to eat into corporate margins. It’s time for investing professionals to pick winners and losers in the market. It’s time for them to dig into a company’s balance sheets and make sure they have good management. All of this may sound basic, but in a bull market it can (and did) easily fly out the window.
“Yes, the NASDAQ is up 26%, but I don’t think we buy into rallies anymore,” Simon said. “Now we’re going into something a little more choppy or flattish.”
This should make for an interesting summer.
As with all things in investing, the key to this will be timing the transition between Wall Street’s denial of this new rate regime and its acceptance of it. The problems the economy is facing today are not the same problems it faced in the recent past. Inflation has not been defeated, and no one knows how long it will take to tame. Reshaped — but not wrecked — by these new conditions, the American economy pushes forward. There is no going back.