No, Chicken Little, the sky ain’t falling
Data continue to come in showing that fears of a U.S. recession are groundless — good GDP growth, good job growth, continued improvement in labor force participation, improvement in “underemployment” (when workers want full-time work and can’t find it), and the increasing signs that oil has found a bottom. For the next few months we intend to focus on sectors with strong growth prospects, excellent demographic tailwinds, and below-normal valuations, including stocks in cyber-security, technology, and consumer durables; and also sectors like energy and gold which have been unreasonably battered by bear markets in commodities. If the Fed does raise rates, in an environment of growth and a strengthening economy, we view that as a positive. Chinese stimulus is having an effect, helping ease fears of a Chinese slowdown on global markets. Psychology is improving.
