David Joy
David Joy
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The labor market is important to the Fed under any circumstances. Once you get rising wage pressure that's when inflation gets intractable.
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The Fed has been the big question mark for the market. I'm afraid the Fed is not going to get out of the way any time soon.
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Stocks in the financial and consumer discretionary sectors look particularly vulnerable as the perception is that inflationary pressures will keep mounting and the Fed is not done with raising rates.
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You might have a situation where the Fed raises rates, modifies the language a little bit but intends to keep on going. If the market assumes that it's one more and done that might be a misread.
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The market is going to sort of tread water until we hear the results of the (Fed) meeting and what the Fed has to say about their decision. That's the 500-pound gorilla of events next week.
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Both candidates seem to be proposing roughly equal deficits over time. Both plan on cutting it in half but doing it by growing the economy as opposed to lowering the dollar amount.
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Bonds clearly got a boost from the flight to safety. But looming on the horizon are the consumer and producer price reports and the CPI is going to be the most important,
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The fact that long-term rates didn't rise in some sense offset some of the impacts of the higher costs of energy. They fought to a draw, and as a result the markets weren't affected by either interest rates or energy.
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It doesn't take a lot of money moving into these stocks to move them higher. But valuations will put a cap on how far things will go.
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Part of the reason we see inflation rising next year is the dollar. Clearly, there is upward pressure on prices because of the falling dollar.
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Some of the tax proposals that are part of the Democratic platform do call for the rollback of dividend tax cuts. That has a direct impact on the stock market.
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We'll see what impact, if anything, the hurricane had on them, and it may be a harbinger.
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The persistence of high oil prices can't be lost on the Fed. Consumers have to pay for higher energy even though it's volatile. It is a real cost.
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We'll see if Goldman can keep that string going.