By David Bailin
Chief Investment Officer
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Given the early momentum in the US recovery, the mean reversion (catch up) of cyclicals to defensives over the next 12-18 months remains our strong view.
In court, witnesses are sworn to tell “the truth, the whole truth, and nothing but the truth.” At many swearing in ceremonies, people place their hand over a bible that says, “and the truth shall set you free.” (John 8:32)
Well, then, hats off to Jerome Powell who told the truth at Wednesday’s FOMC press conference. Here are a few direct quotes, placed in an order that tells the story of where we are at this moment economically.
The Fed noted that the US jobless rate will drop from 13.3% to 9% this year. (Nine percent was near the peak during the Great Recession.) The Fed also forecasts a 5.0% gain in US GDP next year, that the unemployment rate would fall to 6.5% by the end of 2021 and 5.5% at the end of 2022.
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