Investors Bet on Soft Landing and Prolonged Bull Market Despite Likely Fed Rate Hike Pause
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The November rally is driven by the belief the Fed rate hike cycle has ended and inflation will fall in 2023. Investors are shifting to offense for wealth accumulation, benefiting lower-quality and smaller stocks.
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October PPI and retail sales data support the narrative of a soft landing with easing inflation but sustained economic growth. This confirms the bull market should continue into 2024.
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The massive market reversal has already happened from bear to bull market. We may see a pullback to digest recent gains, but the major trend looks positive.
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Inflation should continue rapidly falling to the Fed's 2% target, led by declining shelter costs, reinforcing the pivot to a neutral policy stance.
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