I love to be in the studio with Maria - always electric!
Today we hit the major news items of the day - first off we discuss the mostly likely outcome of the Fed's talk with Congress and tomorrow the Senate. While ostensibly it's about banking regulation and the potential for a central bank digital currency - all Wall Street wants to know is if Powell was joking about not raising rates for a "few years." Let's just say I'm still puzzled why bond traders think this guy is pulling our leg. Pull Powells finger at your own risk! Because that is the world in which we live. High rates for longer.
While many would love to see classic recession activity like a surge in unemployment, inflation back to 2%, and housing prices crater - we may instead see a recession in financial assets. In plain English, a retreat in profit margins. That would have the same effect of a more obvious economic recession. Markets will price all of this the same way - down! Yet, did we not see some downward action from early February into the March mini-banking crisis? Did small value not dip down 13-15% and now ripping??? Could that have been the markets pricing in a smaller more contained recession? Time will tell. I played it as such.
We also discussed the anecdotal evidence of FedEx blowing earnings. Sales down 10%. Perhaps it's idiosyncratic to that firm. That is how the bulls see it - but they see nothing but AI these days. At least I got to mention that those very same stocks we said in February were going up because of eminent Fed cuts are now deemed AI stocks and can only go up. In the end, I see higher prices and growth going forward, but not in a straight line. So, have a plan for any eventuality and a little caution here