Are Stocks About To “Wake Up” From A Fed-Induced Slumber?
The economy is now in VERY serious trouble.
The Fed’s own GDP models now show 1Q17 growth tracking at just 0.5%. This is DOWN from an original forecast of 3.2% in February. Put another way, the economy has begun contracting at a RAPID pace.
Moreover, we are getting numerous signals that the US consumer, the single largest driver of the economy, is not spending.
According to Reuters US consumer spending FELL for a second straight month in March. Moreover, the Fed’s internal models show that 1Q17 consumer spending is clocking in at a “barely alive” rate of 0.3%.
Why Does This Matter?
The Fed managed to “paper over” the weakest recovery in 80 years with massive QE programs. As a result of this, for the last seven years, weak economic fundamentals have been largely “ignored” by stocks.
However, the Fed STOPPED QE back in October 2014. Which means stocks are due for a “wake up call” as they begin to “wake up” to the TRUE state of the US economy.
Chief Market Strategist