Suddenly, the market is back in “good-news-is-bad-news” mode. any positive readings on the economy, particularly on employment and inflationcan be interpreted as signs that federal Reserve Be aggressive with your rate hiking regime.

Anthony Saglimbin, global market strategist Ameriprise Financial, join this week’s “What Goes Up” podcast to discuss your thoughts on that. Below are lightly edited and condensed highlights of the conversation. Click here to listen to the entire podcast, and subscribe on Apple Podcasts or wherever you listen.

You say that good news is again bad news for the market – can you explain that for us?
Over the past few weeks, the markets have really settled into this idea of ​​A, “Are we headed for a recession?”, and then B, “Is this prompted by the Fed to raise interest rates too aggressively? He is going?” And so I mean a good-news-bad-news type of market environment that comes in economic news versus expectations, which probably means the Fed will have to continue raising interest rates more aggressively. And so you saw a little bit in the response to the May employment report, where we created 390,000 jobs in May, the unemployment rate held steady at 3.6% for the third month in a row. All in all, the employment background is very strong. And the markets fell because the idea is that as long as the labor market remains strong, as long as economic activity is going up which I think is the consensus estimate, it means the Fed needs to keep interest rates higher. May have to be increased aggressively.

As we move into the next few weeks and a few months, with data that warms up more than expected, you’d expect the market to greet it more negatively. And then data that is a bit weak, but not too weak, would be positively welcomed. We call this a Goldilocks-like scenario, where economic momentum is declining, but not enough to trigger a recession. This is a tall order, but we are in the market environment right now.

If inflation moderates, what does this mean for the markets for the second half of the year?
The consumer is in good standing, the savings rate is high, the debt level is low. They’re starting to use revolving credit a little bit more, so that’s something that we’re seeing. But net-net, the condition of consumers is good. And as long as the labor market remains in good shape, I think you’re seeing a change in consumer behavior, not a cut in spending. They are spending less on goods and more on food and energy, perhaps a little more on services, and as the pandemic wave of travel begins to subside in the summer, that may start to decline.

So as inflationary pressures can ease and employers don’t hold back on hiring and cut consumer spending, I think the Fed has a very narrow path to slow growth. Is. And the opportunities that are created in the stock market. In my view, Share Market We’re going to see a slowdown in pricing by the end of this year, early next year. If that’s not the case and the Fed can actually land this plane and get a soft landing, not a hard landing, then I think the stock market could recover in the second half of the year.

One thing we haven’t talked about is earnings. And, and that worries us a little bit more because the earnings forecast isn’t really going down. We’re in a phase where analysts need to adjust their earnings, and I think the market reaction could be a little bit more negative.