What is the 'Winnie the Pooh’ economy and does America hold together?

Choose a new storybook because it’s no longer a Goldilocks economy; According to Sanders Morris Harris president George Paul, it may now be a „Winnie the Pooh environment.” Milk joins market dominance to examine the balance between the Federal Reserve’s inflation policies and US business growth.

Paul describes Fed Chair Jerome Powell as „pleased with the path of inflation, and business is more pleased with the ability to generate good and growing profits in a higher interest rate environment than many people thought.” „It’s not Goldilocks, but it’s a good backdrop for both business and the economy right now.”

Powell said at the European Central Bank’s (ECB) central bank meeting on Tuesday that the central bank had „made a lot of progress” in reducing inflation and was „getting back on track with inflation.”

Ball continues by commenting on the outlook for the stock market (^DJI, ^IXIC, ^GSPC) and bond market ahead of the 2024 elections.

For more expert insights and the latest market action, click here to watch this full episode of Market Dominance.

This post was written by Luke Carberry Mohan.

Video transcript

Fox rose today as investors reacted to fresh commentary from Federal Reserve Chairman Jerome Powell sharing the inflation trajectory of the latest economic data.

Powell on Tuesday said he was encouraged by cooling inflation, but stressed that the Fed needs to see more evidence, reporting, and more interest rate cuts.

Now we welcome George Paul Sanders, Morris Harris, Chairman George.

Good to see you.

So talk about the environment.

George.

It’s an interesting note, and we find ourselves in it, George You say it’s not Goldilocks, but Winnie the Pooh would be very happy in today’s environment.

I agree with George.

I’ve got a five-year-old at home, but I’m not, I’m not up to the speed of Winnie the Pooh, what do you say, George, what, what’s the Winnie the Pooh environment?

Winnie the Pooh and his friend Christopher Robin would happily walk through the forest hand in hand, that’s what’s happening in the economy and markets today, Chairman Powell is happy inflation is heading in the right direction but it’s not there yet.

Even with interest rates of what I call 5%, it shows that American business can make very healthy profits and achieve record profit margins.

So Christopher Robin and Winnie the Pooh happily walk through the forest, and Pavel rejoices in the path of inflation.

The story continues

Wow, business is more than happy to make a nice profit in a um, high interest rate environment, it’s not Goldilocks as many people thought, but it’s a damn good thing. .

What happens next, George?

I mean, how long can this go on?

If that continues, what does that recession risk look like?

There will always be recession.

Oh, Fed or some other fatigue, if people think that this body can create a backdrop that gives us Goldilocks or Winnie the Pooh, it won’t.

We have a long development period in teeth.

With the evolution of the stop clock, twice every 24 hours, we’re heading towards it, and you’re going to have a recession or something like a recession, and that’s going to hurt and hurt profits. At the same time the stock market.

But again, it’s not because of policy failures.

Economics and growth and innovation get tiring after a while.

In late 2019, 2024 and 2025, we are going to see a dip in the stock market, with profits rising.

Not because of the feed or the fiscal policy, but in spite of it, George is your message to investors here, a message that you say stay where you are in your portfolio.

If your stocks were in your normal range, would you say George?

Do you want to stay where you are, in those positions, or George?

I mean, after our run in the first half, I mean, do you want to take some of those wins and put that money to work on some new names?

Most boring thing in the world?

Being told to stay where you are is not popular in the media or otherwise.

Yes, yes, we all know that trying to time the market is a fool’s game.

People who try to time the market end up poor.

And secondly, there’s nothing from an economic perspective that means someone has to try to take the chips off the table.

You want to be a participant in America’s growth over time.

You, you don’t say, I made a lot of money.

I would pull out and stand aside.

This is not a smart thing at any time.

So I hate being bored, stay on course, but I say stay on course even if it’s boring.

George.

What do you think about the action we’ve seen in the bond market?

That put some downward pressure on yields today as we saw Chairman Powell’s comments on inflation.

And you compare that to the huge run we’ve seen in yields over the last two trading days.

At least the yield build is driving its course for now or if we brush back against those four or five levels, how does that look for equities?

Woohoo Chairman Powell wants inflation dead, then wants to do an MRI to confirm it’s dead, and show um MRI to everyone so the whole world understands it’s dead.

Hmmm we’re probably going to see a period of subdued short-term rates.

But in the near future, there are fears that a Trump administration or a second Biden administration would be fiscally promiscuous, and that would put upward pressure on yields in the long-term portion of the market.

So I think we’ll see 450 before we see 425 on the 10-year Treasury and below that.

We, we, we closed the markets, Fed Winnie the Pooh.

I, I, we covered a lot of ground George.

Thanks for coming on the show today.

Appreciate it.

Thanks Josh.