Strong employment, low inflation, and a soft landing are a goldilocks scenario for investors. Even though a soft landing is hard to achieve, a survey is optimistic that this would happen.
The Financial Times surveyed 37 economists this month. In a median estimate, they believed that gross domestic product would grow by 2.3% in 2024 and by 2.0% in 2025.
92% of the economists believed that the Federal Reserve would cut its lending rate by 25 basis points. Last week, the FOMC cut rates by 50 bps.
Investors should accumulate bank stocks if shares weaken, in a soft landing scenario. J.P. Morgan Chase (JPM) stock recovered from a downtrend that started late last month. Bank of America (BAC) is trading in a range of between $38 – $41.50. Wells Fargo (WFC) risks forming a downtrend but is equally attractive.
Financial institutions thrive in a high-interest-rate environment. They collect net interest income, which is a high-margin business. When rates fall, it stimulates the economy. This increases business deals such as mergers and acquisitions.
Investors should continue to avoid broken businesses. Firms like GoPro (GPRO), Bumble (BMBL), and Peloton (PTON) will struggle even as the Fed achieves a soft landing
