A return to a more traditional US economic cycle would be good news for stocks as stronger growth and inflation drive pricing power, revenue growth and higher valuations. But watch these three signals to see if the economy backtracks.
A quick review of productivity and wage-inflation theory explains the difference between the current slow-growth period and previous bull markets. It’s time to be cautious and be ready to take action if the Federal Reserve increases rates.
The velocity of money has slowed significantly since the Great Recession, blunting the effectiveness of the Federal Reserve’s efforts to stimulate the economy through quantitative easing and ultra-low interest rates.
DISCLAIMER: Capitalist Times, LLC is a publisher of financial news and opinions and NOT a securities broker/dealer or an investment advisor. You are responsible for your own investment decisions. All information contained in our newsletters or on our website(s) should be independently verified with the companies mentioned, and readers should always conduct their own research and due diligence and consider obtaining professional advice before making any investment decision. As a condition to accessing Capitalist Times materials and websites, you agree to our Terms and Conditions of Use, available here including without limitation all disclaimers of warranties and limitations on liability contained therein. Owners, employees and writers may hold positions in the securities that are discussed in our newsletters or on our website.