It's less important to focus on what the Federal Reserve will do with monetary policy because markets are already entering an easing cycle, according to renowned investor Jim Paulsen.
According to the Leuthold Group's chief investment strategist, bond yields are falling, the dollar is getting weaker, and junk-bond spreads are narrowing.
Paulsen doesn't care what the Fed does because the Fed isn't driving the ship. We are in a brand new easing cycle right now.
As consumer prices and producer prices slowed by more than expected in July, investors were hopeful that the Fed would take a less hawkish stance on rate hikes.
The central bank wants to bring inflation down to 2%. policymakers cautioned that it is still too early to declare victory on inflation despite the improvement in readings
The Fed has been behind the curve the entire time, according to Paulsen. The Fed is not doing enough to slow inflation.
Financial market conditions began to tighten last year, before the Fed first hiked rates this year.
He said that the markets are going the other way and that the Fed is behind the curve.
Paulsen said that avoiding a recession will be more important for markets than the central bank.
We will have to decide if we're going to recess or not. I think that is becoming the bigger issue right now.