Markets Cautious Ahead of Inflation Data That Could Shape Fed Policy, While Strategist Warns of Risks if Growth Stays High
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Equity markets are mixed as investors await new inflation data that could sway the Fed's next policy decision.
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Strategist Phillip Colmar believes investors should brace for a "no landing" scenario where growth stays resilient, preventing slack in the economy to reduce inflation.
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In a no landing outcome, Colmar sees no economic basis for Fed rate cuts, though the Fed may still try to do 50bps to window dress inflation uncertainty.
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Colmar warns the big tech/growth stocks rallying recently have very high valuations and optimistic earnings assumptions that leave little room for error.
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For equity sectors, Colmar likes aerospace/defense, energy, mega-cap financials, and healthcare over tech in a no landing backdrop.