For the past three years, the markets have been haunted by a particularly ghastly boogeyman – inflation. But Friday’s Personal Consumption Expenditures (PCE) report suggests that boogeyman has been officially vanquished. And with inflation normalized, it seems stocks are set to keep rallying to record highs.
We believe that reinflation is the biggest risk to the U.S. economy right now. So long as that doesn’t happen, the Fed will keep cutting the rates, the economy will restrengthen, and stocks will go higher.
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