The Fed is expected to launch another outsized rate hike in November as it tries to bring the multi-decade high inflation under control. As a direct consequence of the Fed’s aggressive monetary policy tightening, demand is slowing. The economy contracted for two consecutive quarters, indicating a weakening economy.
Despite strong macroeconomic headwinds, there is a resurgence of optimism among investors this corporate earnings season. The decent start might signal that the economy is in a better state than anticipated. “3Q and 4Q earnings should confirm fundamentals remain anchored in resilient labor market and Covid reopening,” said Dubravko Lakos-Bujas, JPMorgan’s head of global macro research.
