Good morning and welcome to the Weekender for Saturday, April 22, 2023. As measured by the S&P 500, equity markets were lower by a rounding error last week. Over the past year, the Fed has been playing catch up, raising interest rates to combat persistent inflation that they now admit caught them off guard. As the Fed has been raising rates, financial markets have been eagerly anticipating, predicting, and trading when rates will peak and the Fed will pivot. As an investing narrative, markets have treated bad economic news as suitable for markets. Data that shows the economy is weakening has been good news instead of bad news since it portends a Fed pivot away from rate increases and assumes rates will be lower in the future. Such a future would be constructive for asset prices all around.
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