The stock market has been climbing since mid-October even though pessimism has prevailed among economists and stock market strategists.
Today, we examine this “pandemic of pessimism”—how widespread it is, our perspective on the bearish case, what the Fed’s staff thinks is ahead for the US economy, and a few of the voices of doom. … We counter that the stock market’s trend is driven mostly by the earnings trend; we doubt QT will send either southward. Earnings growth may be weak in our rolling recession forecast, but growth it will be nonetheless. The labor market’s remarkable resilience reflects the economy’s resilience.
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