Economy slowing is why you get a Fed rate cut, says market expert



to your point I think last week or the week prior I think the Mexico tariffs were a huge distraction and I think that when it comes back to the this period where we are now we're continuing to see accommodation from not only from the Fed but you saw comments out of the ECB at the BOJ last week we have more tools we will use them I continue to think that the market is filled on the basis of the fact that we're going to continue to have accommodative monetary policy and liquidity being provided to the markets I I think that the equity markets are overstating the benefit that a rate cut will give to them in the back half of the year they're understating the amount that the the the point that the economy slowing it would be why you would get a rate cut and not because the the marthy the Fed is overly supporter of asset markets as it relates to equities and so I think right now we're back to this story of accommodative policy we're back to the story of where else do you go with your money you you know you know what unless you don't think the economy is really slowing as bad as some feared and you get a pre-emptive rate cut of sorts from the Fed to make up for the mistake that some say they made in December that's that's like the best of both I mean they're so they're cutting rates and the economy is actually doing pretty pretty well what's what's wrong with that picture what's bearish about that but I think if you look at whether you believe they should do it or not it's growth expectations for the next couple of years continue to come down you're looking at across the board so I don't know how the the market continued to factor in a continued rise in equity prices when we're expecting growth to continue to slow okay so Joe it's not necessarily just sentiment that's improved mkm has an interesting note out today they look at their technical strategy JC O'Hara over there says the internals are firming up in the market as well the market is just looking better if you look across the whole thing they say a surge in the ratio of advancing the declining volume has historically been a good indication that the market is ready to push higher they say on June 4th the ad ratio was 18 to 1 the strongest reading since January 4th then you had on Thursday that last week 16% of the S&P made new highs the strongest reading since January of 18 okay it says internals are better market is primed to go Scot I think we could all see that though with the market up five and a half percent for the month I think that goes to Josh's points we're reacting to the last three or four days I would love to have that note this time last Monday that would have been a valuable time to have it I think we're making a mistake here we're talking about the market okay and I think what the lesson so far of late 2018 and 2019 is this there's a high correlation between what Federal Reserve intended policy may or may not be and these high momentum mega cap type of names in the marketplace and those are the names that are reacting and in getting whipsawed all over the place when you're looking at your portfolio in all these asset classes again high-yield investment great they did not flinch high-quality momentum names like a Microsoft like a McDonald's like a Motorola solutions they have held firm so I think you have to look at that and say okay now looking forward and understanding we're taking the headline off the table whether we believed it was ever gonna be there or not with Mexico we've got a potential rate curve where is the sensitivity if the market continues to move higher and for me it's possibly the emerging markets you




Comments
  1. The FED is cutting rates because the economy is strong….hahaha. CNBC, you guys have zero integrity. Everyone on that panel should be ashamed of themselves.

  2. No offense to the anchors but everyone and their dog now knows that the FED will prop up this market at all costs. Even Fornite game streamers in their teens and 20's are giving investment advice, and they aren't even that great at Fortnite!. LOL

  3. Pay check are less and less do to Trump srews American people tax increase. Increase price of goods trump. Low paying jobs.

  4. There will be a rate cut because Fed Funds is over IOER. They have lost control over the price of money.

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