Why the Fed is carefully watching tight market: Strategist

Initial jobless claims fell to 233,000 for the year ending June 22, down 6,000 from the previous year. The print pointed to a potential cooling within the activity market, raising questions about Fed retained coverage and its implications for the broader inflation sector. Crossmark World Investments Marketplace Strategist Victoria Fernandez joins Catalysts to give insight on those traits.

Fernandez believes the latest fiscal signals are “coming in weaker than expected,” though he says some dovish signals won’t change the Fed’s stance on rate changes. On the other hand, Fernandez emphasizes that the tight market is “the element they are looking at right now,” specifically whether it will “weak so much that it will impact consumer spending.”

Mentioning the factors that could influence the Fed’s upcoming choice, Fernandez highlighted the importance of the latter’s hard-earned file. “I think there will be a lot of focus…on job opportunities, on attrition,” she says. Fernandez says key inflation metrics will play the most important role in shaping the Fed’s policy choices.

For more professional insight and untouched market action, click here to watch this full episode of Catalysts.

This post was written by angel smith

video transcript

Victoria, thank you so much for coming.

So look, we’ve been given unhealthy new home gross sales, the best claims since 2021, which suggests that other people are taking longer to get a job given that this is the age the Federal Reserve is the tipping level for. Or how come we handed him over in the first place?

I don’t really believe we are at peak levels but.

I think we’re getting there.

I’m being cruel, if you remember that Powell’s comments were the closest we got to the day in the first few months when we were getting economic surprises, especially in terms of inflation.

It took 3 months, right?

For them to say that they are losing confidence in the path of inflation.

So we’ve been given a bit of a week here where things were coming in weaker than expected.

I don’t believe that just a few experiences and a few weeks are going to change their outlook at this point.

But as we move forward to look at it, you know, uh sustained claims, initial claims, which are commendable, I think the amount of blowback is one thing that the Federal Reserve is really seeing the opening up of those activity. is, leaves quantity.

These are the issues that will really make them realize that the hard-earned market is weakening.

And we all know that the factor they’re looking at at the moment is that the tight market will weaken so much that it will impact consumer spending.

the story continues

Consumer spending is using this financial system so much that full incentives have come into play.

So I think we’re at the beginning of the tipping point, although we’re not quite at the end of it yet.

Victoria, should we put extra emphasis or do I think the file is more important?

Is it going to be the case that there will be upcoming jobs prints rather than subsequent inflation prints?

Shawna, it’s hard to say it’s a dual mandate, isn’t it?

And it feels like the Fed largely specializes in one or the other alternative um depending on the balance of the numbers that we’re seeing optic.

So while they thought inflation was slowly turning to deflationary growth, the focus was on the tight market.

Then when we were given the staggering inflation figures, the focus shifted a bit.

So once we look at the subsequent hardship experiences, I think there could be a batch of focus, as I said at the opening of the activity on activity leave.

Um, there’s a batch of volatility that’s only going on in volume per 30 days and there’s a batch of seasonal changes that are consistent there, especially in the summer weeks.

Um so they might be looking at parts of it.

I think customer demand, sentiment, confidence numbers are becoming something that they look at.

And clearly the inflation characteristic is going to be important, not just general inflation, but we think it is super core inflation that they are really looking at.

Um so this is all becoming notable to the decision maker, Victoria, I want to crack your whip in the broader fairness area because you presented it really, it seems like, you just say you won’t get up to educate. In the best way because to vault into this market rally at this time it is necessary to have complete knowledge up to a point.

Where are you looking for the edge?

Yes.

So it may be a little difficult to find an edge at this time because there is so much focus on this market.

I am ruthless, you guys know these are the 56 names who are really using everything in their efficiency today.

I’m being ruthless, NVIDIA has over a third of the day-to-day efficiency for isolated SNPs.

Uh rule 5 or 6 are close to 75% of going back.

Therefore, it is necessary to spread the word there.

What we are doing is trimming some names like NVIDIA because they have their runs waiting for a pullback because we know they are going to get them.

NVIDIA had these this year, we noticed a shortage there.

So if you don’t have a promotion, you will be expected to go there.

However, take a look at some of those alternative tech names, perhaps less catchy names out there on the market, right?

One of the IBM names, um one of the alternative names that are maybe lagging a little bit behind those um ruled heavy names, are still generally going to be profitable.

I myself am the government looking area year after year relative to the merciless semi s and p. Although I additionally think you might want to expand on it a bit.

Take a look at some of those additional major, more valuable names that you can put in your portfolio to help mitigate some of the volatility, I think we’ll keep um for the second half of this day.

So whether it’s a bet offer or not, um whether it’s a staple or not, as I said, and even with the handover it’s probably going to go closer to 4.5.

If the Feds don’t deduct fees, you’ll also neatly upload some financial details there.

Victoria, the rest of what you’ve seen over the last several weeks or even looking at these days, the stretch has seen the action that we’ve seen with Miron, Miron is under pressure now and really the earnings impact at all Looking good.

Has the AI ​​story been radically changed, given the hype we saw at NVIDIA earlier this year and one of the questions we’re pondering these days after Mike Rohn’s print? You know, Tony, you’re reasonable.

It’s this whipsaw and I think that’s what we’ve got here is the effort if you travel in a multi-purpose way or any other way that can easily come and chew you up in a matter of days.

So I think it’s important to look at the AI ​​story as a long-term story, although maybe start to look at the secondary outcomes related to one of those alternative corporations that might come along and benefit from the AI ​​narrative um. .

Look, whenever we focus so much on index performance, it is the bottom-up names that actually perform well.

However the question is, how long does that focus period last?

And with AI, it seems we still have some distance to go.

I’m ruthless, Myron, his income has been good looking reliable.

It was just that the outlook was a little low and today your patronage becomes unhealthy if you are not exceeding expectations, but let’s not get that wrong.

I’m being ruthless, we’ve come a long way at Micron in the last 18 months.

So the 5% to 6% pullback, um, is not going to be that adverse, although I think you have to be careful, um, of putting all your eggs in one basket just for those parts.