Many investors have been wondering why markets are going higher if problems in financial markets are emerging and the economy seems to be signaling that a slowdown or recession is on its way? From what we see, there are three main reasons that markets are looking through the bank sector’s stress and recent recession indicators:
1. Interest rate expectations – There’s increasing consensus that the Fed is nearly done raising interest rates.
2. Warm winter – Europe was saved from a potential energy crisis by a warm winter, and now demand for natural gas will drop as temperatures rise.