This year, the S&P 500 experienced the demise of one bull market at the hands of a 34% bear. The market rallied furiously since the end of March. Exact dating of bull and bear markets is not a science. Does the bull market start at the bottom of the last bear or does it only start at the previous bull’s peak? Liz Ann Sonders has marked our current regime as a new bull after the S&P 500 hit new all-time highs. She also pointed out that the Consumer Discretionary sector has led the way along with tech. Apple and Microsoft are Tech – Google and Facebook are Communication Services – Amazon is Consumer Discretionary. Tech is up 76.23% since the bottom. Communication Services is up 52.66% and Consumer Discretionary is up 76.22%.
Something to keep an eye on: The Federal Reserve is no longer shooting for 2% inflation, but 2% average inflation. At the recent (virtual) Jackson Hole meeting, Federal Reserve Chairman Jerome Powell said very deliberately:
“…our new statement indicates that we will seek to achieve inflation that averages 2 percent over time. Therefore, following periods when inflation has been running below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.”
Don’t look for the Federal Reserve to micro-manage around the magic 2% inflation number. The statement also leads us to expect lower interest rates for longer.