economy had embarked on a new era of corporate profitability driven by technological innovation that would keep inflation pressures at bay, we witness a similar sentiment today, as encapsulated by Mr. equities continued their advance despite the threat of higher interest rates as investors enjoyed strong profit growth as long-term inflation expectations hovered around 2%, just as they do today.Īs was the case in the mid-to-late 1990s when strategists were falling all over themselves proclaiming that the U.S. investor sentiment and put pressure on foreign currency values as the Fed was threatening to embark on a cycle of rate hikes. Yes, the Trump Administration was engaged in a ‘trade conflict’ with China, which had weighed on ex-U.S. economy was experiencing robust employment and business conditions supporting historic levels of corporate profitability but without the wage growth that would spark an acceleration in inflation. economy emerges from the global pandemic.īack then, the U.S. The last time we referenced ‘Goldilocks’ in our writings was back in September 2018 (“ Goldilocks Enters the Breach”), a paradoxically similar yet different environment from the one we face today as the U.S. “We don’t know what the future holds, and it is possible that we will have a Goldilocks moment – fast and sustained growth, inflation that moves up gently (but not too much) and interest rates that rise (but not too much).” – JPMorgan Chairperson and CEO Jamie Dimon, 2020 Annual Shareholder Letter “ hot enough for profit growth, but cool enough to keep the Fed from hiking interest rates” – Economist David Shulman, 1992, credited for coining the phrase ‘Goldilocks Economy’
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