June 27, 2019

US economic growth is slowing while stock market valuations are high

Doug Kass thinks the US economic growth is slowing while stock market valuations dont seem reasonable based on fundamentals. Below is an excerpt from his twitter post.

Regardless of my interpretation this morning, during the day we received more confirmation of slowing domestic economic growth and the message of the continued drop in yields (-3 basis points, the yield on the 10-Year Treasury closed at 1.99%) was also loud and clear.

The rate of U.S. economic growth is decelerating markedly, valuations are extended, and a number of fundamental headwinds and concerns are pressing against a market that is very close to an all-time high.

Over the last few days, the business media has seemed to have echoed the notion that we are in a small pause that refreshes. For this to be accurate, we probably need a trade deal with China and my notion of The Fed Pushing on A String must be incorrect.

I don't think we will see a trade deal "with teeth" nor do I think taking down the federal funds rate from 2.40% to about 2% (or lower) will have much of a positive economic impact. 
That said, it sure looks like the market has again been repelled at similar levels achieved