Manley Macro Memo

 Investors are ebullient that the Fed has orchestrated a soft landing, yet corporate profits have declined for three consecutive quarters, and the leading economic indicators continue to deteriorate. Since monetary policy acts with a lag, and credit growth will continue to decline due to the regional bank crisis, we expect economic growth to slow and corporate profits to disappoint.

 Investors are ebullient that the Fed has orchestrated a soft landing, yet corporate profits have declined for three consecutive quarters, and the leading economic indicators continue to deteriorate. Since monetary policy acts with a lag, and credit growth will continue to decline due to the regional bank crisis, we expect economic growth to slow and corporate profits to disappoint.

Should Investors Sell in May and Go Away? We believe the economy is on the verge of recession, and the next leg of the Bear Market is imminent.

Stocks have a poor risk-reward and offer a historically low equity risk premium. A 4.9% risk-free rate is great.

Stocks are in a bear market, and we estimate that the economy will enter a mild recession this year. 

The S&P 500 rallied 17% higher over the past 8-weeks due to favorable seasonality and positive fund flows. We expect the bear market to resume when the year-end rally ends in January.

The Fed's mistakes created the worst year for balanced investors since the Great Depression. Is the worst over?

Don't Fight the FED!