Shares may be at record highs, but growing concern about rising interest rates, inflation and the Federal Reserve’s next step is to keep investors on the edge.
That’s what experts are watching before the Fed’s decision on Wednesday.
Jim Cramer, host of CNBC’s “Mad Money,” says it’s still an reversible market.
“The money comes in here. And I just think when I get news that I know there will be people who say, ‘Wait a second, that’s a bad sign’ or they want to think on the other side of the trade. But I’ve heard Scott Kirby this morning from United I have heard these updates from cruise lines and how rates can increase, and I say again, “You know what? It’s a good time to invest, I’m sorry! “”
Karen Firestone, president and CEO of Aureus Asset Management, breaks the market disconnect.
“The market in general has very expensive stock exchanges and we have seen what happened to the group: that is, Peloton, Zoom, Airbnb, DoorDash, Palantir. These shares have been down since the fall because they have just been surpass, fantastic companies, but selling at multiple high sales.So we now have the reopening trade since September.And of course the airlines, hotels and casinos will have a big commercial boom compared to what they had during Covid all year round.This does not mean, however, that stocks will continue to rise forever.You feel that so many people talk about their enthusiasm for cyclical or value trading, but most market sectors are trading around 23 or 24 times Now, if we look at the industrialists, who were very depressed last year, they are 24 times the gains.[erpillar] and Deere sell at the same multiple as Facebook and Google, and tech stocks sell 25 times next year’s earnings, and they obviously have some expensive names in them. So, you know, you can take a break from the cycles, which we actually saw with technology. Technology stocks peaked in early September and, in a way, went into that calm and continue to go down, big names coming down from where they were in the fourth quarter. They had a hard quarter in the quarter. So far they have had a very hard year. They increase by approximately 2% and cyclical stocks increase by between 8% and 20%. “
Judy Shelton, author and economist, shares what the Fed can and cannot do to curb inflation.
“The reason people are afraid of inflation now is that they see very rationally that there has been a lot of liquidity injected into the system. And we’ve all learned that too much money chasing too few goods can cause inflation. The problem thinking that it is a compromise of the Phillips Curve believes that if we advance inflation we have the tools to combat it.Well, the tools to combat it are to increase the interest rates paid on reserves or to continue buying even more, to interact more in the credit markets, so I don’t think the Fed will start selling it soon.I worry if they hint that they can raise the rate of excess reserves, which are already at a record 3.6 trillion This is a way for banks to be more interested in interacting with the Federal Reserve than private lending, and the way to achieve productive economic growth, of the kind that really increases the production of goods and services, is to encourage small companies, here are the jobs. So I’m concerned that the Fed is in a somewhat unsustainable position where it believes that, by expressing a new tolerance for inflation, it is somehow helping workers with lower wages, when in fact they are the ones who hurt the most for inflation. And I think they are discouraging private lending which would be to let banks stop piling up reserves in the Fed and lending them to the real economy, then you would get real growth, of the kind that raises wages without causing inflation. “
Thomas Farley, president and CEO of Far Peak, warns of unrealistic valuations and projections.
“What worries me is to see investors hurt. And there have been some deals that I look at and I just say that this valuation is totally unrelated to the financial reality … annual projections of a pre-income business and the market somehow, I value it for the 2024-2025 revenue that may or may not materialize.And my concern is that people get into that enthusiasm and finally look bad if the actions deviate., that’s the my only concern about SPACS is this kind of exact situation, really just selling shares out of hope and belief. I would like sponsors to feel a little more connected to these projections, stay in their actions for these projections. “
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