We still see greater odds that the economy will glide to a soft landing (60%) than plummet to a hard one (40%), which nearly everyone else expects. What might a soft landing look like?
The happiest—and most contrary—of scenarios would be a return of the “Old Normal,” which actually wouldn’t entail a landing at all: real GDP growth of at least 2.0%, moderating inflation, and not much more monetary tightening. … We expect this week’s market-moving news to be mostly reassuring, with a subdued CPI release and earnings reports that don’t disappoint. … Recent news has cut both ways—a concerning NM-PMI but auspicious capital-spending signs.