Has Federal Reserve pulled off perfect soft landing? Investors plan moves

By George Prior

The US is now likely to pull off the perfect ‘soft landing’, with the world’s largest economy avoiding a recession as the latest inflation data comes in cooler than expected.

This is the bullish analysis of Nigel Green, the CEO and Founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations, as the consumer price index (CPI) rose just 0.2% in June and was up 3% from a year ago, the lowest level since March 2021.

The deVere chief executive says: “The US CPI data raises hopes that the Federal Reserve is going to be able to bring down inflation without steering the US economy into a recession.

“There had been legitimate concerns that with the aggressive monetary policy to cool red-hot inflation, the central bank might overtighten and push the world’s largest economy into a deep and/or protracted recession.

“However, the battle on rising prices is being won, as the data suggests, meaning the pressure is off the Fed for future rate hikes.”

He continues: “Cooling inflation and a strong and resilient labour market suggests that no recession will come in 2023.

“We believe the Fed has pulled off the perfect soft landing.”

The markets appear to agree. On Wall Street, the S&P 500 and the Nasdaq closed at their highest levels since April 2022 following the US CPI release on Thursday.

With a recession likely to be avoided and a soft landing achieved, investors will be looking ahead to a period of potentially more stable economic growth.

They will be working with a financial adviser to consider rebalancing their portfolios to seize the opportunities that will be presented.

“Tech, especially areas such as software development, cloud computing, artificial intelligence, cybersecurity, and e-commerce, should do well,” says Nigel Green. “Investments in pharmaceuticals, biotech, medical devices, and healthcare facilities will also be appealing.

“During periods of economic stability, governments typically focus on infrastructure development. Therefore, investments in areas such as construction, transportation, energy, utilities, and telecomms infrastructure are likely to get a boost, as will the financial sector.”

The deVere CEO concludes: “We’re not out of the woods yet, but it is increasingly likely the US economy will not face a full-blown recession this year.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.