Since last year virtually every economist and market strategist, I included, has been saying that a recession is near.  Some said one had already begun.  All were onboard and the economic data, including the index of leading indicators, supported them.  What has been missing?  The recession.   It’s not that the economy is strong.  In fact GDP growth is barely above stall speed and not at a level that can support prosperity, rising employment and real incomes, and better standards of living.  It seems that investors don’t care.

Just a few months ago nearly every guest on financial networks was bearish.  Some hedged by saying that we are in a bear market but that the October low would hold.  That makes no sense.  If October 12 was the low then that would be the beginning of this bull market.  The market has rallied 22 percent since then.

As many expected the Fed is pausing its rate-raising agenda to assess the impact of the past year’s increases.  Chair Jay Powell said there are two more increases in the plans for this year, all in an effort to reach the inflation goal of two percent.  Two more?  Over the years the expectations of Fed leaders have often been off the mark and not by a little.  So don’t count on two boosts.  In fact, the market rally after the Fed meeting reflects skepticism about two more.  Investors aren’t buying it.

The fuel for the stock rally will come from the trillions on the sidelines and in money market funds.  Money managers know that clients understand if they are invested in quality companies and stocks fall.  It happens.  The next bull market will make it right.  But if the market rallies and clients miss the surge they won’t be forgiving.  They’ll leave.  So for professionals, especially hedge funds, there is more risk being out of the market than in.  The acronym FOMO covers it.  That’s “Fear of Missing Out.”  That fear more than anything may be driving the market.

Recession or no recession I still like dividend payers (and raisers).  The Vanguard Dividend Growth ETF (VIG) has those.  For income I continue to own Ares Capital (ARCC) and my favorite preferred is Annaly Capital Preferred ‘F’ (NLY.F).  While analysts debate swings in the stock market, those securities have served us well and will continue to do so.

— David Vomund is an Incline Village-based Independent Investment Advisor.  Information is found at www.VomundInvestments.com or by calling 775-832-8555.  Clients hold the positions mentioned in this article.  Past performance does not guarantee future results.  Consult your financial advisor before purchasing any security.