Equities may be record high, but growing concerns about rising interest rates, inflation and the next step by the Federal Reserve are keeping investors sharp.
Here’s what experts are watching ahead of the Fed’s decision on Wednesday.
Jim Cramer, host of CNBC’s “Mad Money”, says it’s still an investment market.
“The money comes here. And I just think that when I hear that I know, there will be people saying, ‘Wait a minute, that’s a bad sign,’ or they want to think the other side of the trade. But I I listened to Scott Kirby from United this morning. I was listening to the upgrading of the fairways and how they could increase the rates, and I came back and said, ‘You know what? This is a good time to invest, sorry! ‘ “
Karen Firestone, chairman and CEO of Aureus Asset Management, breaks the market connection.
“The market generally has very expensive stocks and we have seen what happened to the group – that is Peloton, Zoom, Airbnb, DoorDash, Palantir. These stocks have been declining since the fall because they came just before themselves, great companies , but they sell at a large number of sales, so we have been reopening the store since September. Of course, airlines, hotels, casinos are going to have a big boom compared to what they had the whole Covid year. however, not that stocks will rise forever.You hear so many people talk about their enthusiasm for the cyclical or value trading, but most sectors of the market trade about 23 or 24 times going forward.If you look at industrial industry, which last year a lot was depressed, it is 24 times more[erpillar] and Deere sells at the same multiple as Facebook and Google, and the tech stocks sell 25 times earnings next year, and they obviously have some expensive names in it. So you know, you might have a little pause in the cycles, which we actually saw with technology. The technology stocks peaked at the beginning of September and they went into silence and are still lower, the big names are lower than in the fourth quarter. They had a tough quarter in the fourth series. They have had a very difficult year so far. It rises by about 2% and cyclical stocks rise from 8% to 20%. ‘
Judy Shelton, author and economist, shares what the Fed can and cannot do to curb inflation.
“The reason why people now fear inflation is that they see very rationally that a huge amount of liquidity has been injected into the system. And we have all learned that too much money chasing too few goods can cause inflation. The problem of thinking that it’s a Phillips Curve consideration believe that if we advance inflation, we have the tools to fight it.Well, the tools to fight are to raise the interest rates paid on reserves or to increase buy, to have more interaction in credit markets, and therefore I do not think the Fed is going to start selling back any time soon.I’m worried if they point out that they could increase the rate on excess reserves, which is already a record high of 3, $ 6 billion is that they promote this tendency of banks to be more interested in interacting with the Federal Reserve than private lending, and the way you get productive economic growth, the kind that produces goods e and services increase is to encourage small businesses, this is where the work is. So I’m worried that the Fed is in a bit of an unsustainable position by thinking that by expressing a new tolerance for inflation, they are somehow helping the lower wage workers, when in fact they are the ones who are hurting the most. by inflation. And I think they discourage private lending, that is, to make the banks stop putting up the reserves with the Fed and to borrow it in the real economy, then you get real growth, the kind that raises wages without raising inflation to cause. ‘
Thomas Farley, chairman and CEO of Far Peak, warns against valuations and unrealistic forecasts.
‘The thing I’m worried about is getting investors hurt. And there are some transactions that I look at, and I’m just saying that this valuation is completely detached from the financial reality … SPACS after the transaction where they value five-year forecasts of a business before revenue and the market values it at one somehow on 2024-2025 income that may or may not materialize, and my concern is that people will acquire the enthusiasm and eventually get hurt if the shares pass. , my only concern about SPACS is the exact kind of situation, just to sell a share on hope and faith. I would like to see sponsors feel a little more caught up in the forecasts, and hold their shares for the projections. “
Disclaimer