Cue the theme song from "Curb Your Enthusiasm." One market strategist thinks investors are WAY too excited about the December jobs report.
Principal Asset Management chief global strategist Seema Shah thinks that even though "expectations for a soft landing in the economy have likely been boosted in light of today’s jobs report," that is probably the wrong take.
Shah argued in a report that "with the unemployment rate back to the historic low of 3.5%, how realistic is it to expect wage growth to move meaningfully lower?"
In other words, labor conditions are still tight and companies are going to have to keep paying more in compensation to attract talent.
With that in mind, she thinks the Fed "will likely be skeptical" and "that there is still so much work ahead of them." Shah said that short-term interest rates, currently in a range of 4.25% to 4.5%, "are set to rise above 5% within just a few months."
The takeaway? Shah wrote that "a hard landing looks to be the most likely outcome this year. The recession clock is ticking."