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Are economic indicators still pointing to a recession? | Ausbiz
In the interview, Isaac Poole from Oreana Financial Services shares his perspective on the current state of the economy and the potential impact of upcoming Federal Reserve decisions. Isaac observes that the economy is showing signs of slowing down, with some key indicators pointing towards the beginning of a recession. Despite this, the labor market remains resilient, and inflation continues to fluctuate.
Isaac predicts that the Federal Reserve will likely enact another quarter-percent rate hike, which could lead to more restrictive economic conditions and possibly a recession. He claims that historically, the Fed has had a tendency to over-tighten rates and plant the seeds for future recessions. While the severity of a potential recession is uncertain, Isaac feels that it is more likely for it to be short-lived rather than shallow.
Isaac also addresses the impact of the current economic climate on corporate earnings, noting that growth in this area has slowed down considerably. In response, companies may attempt to guide earnings growth lower, which could pose challenges for the markets in the coming months. He suggests that current market valuations are overvalued and recommends a more cautious approach to risk assets, such as lightening up on equities and allocating to treasuries. The main risk to this strategy is the possibility of inflation re-accelerating and the Fed continuing to hike rates, which could lead to further sell-offs in treasuries.
(Source: Ausbiz)
Click here to watch the interview.
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