Alex Morris, president and chief investment officer with F/M Investments, joined Cheddar News to discuss Wednesday's trading session as stocks climbed amid optimism over a potential debt ceiling deal just days ahead of a deadline.

<div class="block">Alex Morris, president and chief investment officer with F/M Investments, joined Cheddar News to discuss Wednesday&#39;s trading session as stocks climbed amid optimism over a potential debt ceiling deal just days ahead of a deadline.</div>

Closing Bell

Analyst Discusses Wednesday Trading as Stocks Climb on Optimism over Debt Ceiling

Joining me now here at the S is Alex Morris, president and Chief Investment Officer at FM Investment. Alex. Thanks for coming on the show. Thanks for having me. All right, expectations, decent gain as our viewers see on the screen there in the wake of some optimism around a debt deal. Are you optimistic? I am. I'm cautiously optimistic. Politicians are known for saying one thing and then not delivering on that. I don't know that the deal sitting in the speaker or the president's head is final one we get, but it's clear that folks have realized this is serious damage is done every day. We don't have a deal. So now it's time to make this no longer an issue before the deadline hits interesting. We were also taking a look at some regional banks there and it's been quite remarkable that the overall stock market has held up as well as it has given the 2nd, 3rd and 4th biggest bank failures that we've seen in us history just in these past few months. Are we out of the woods when it comes to the woes facing some of these banks? I think mostly that we have to remember there's 4000 banks in America, which is an awful lot of banks. So it's inevitable. Something happens. I think we're probably out of the top 2025 banks and banks are generally speaking, very well founded at the moment. They're very well capitalized the reforms. Post 2008 mostly worked. There are some things that we miss, we're going to change legislation. We'll see that coming out most likely next year to fix up some of the duration mismanagement protocols that were put in. But long term, I think the banks are fairly well sound and the big ones are over. So based on what you're telling me, Alex, I'm gathering that you think stocks can go higher from here. I think they can and we believe that both treasuries and growth stocks can go higher. It's folks who are looking for a safe haven asset, whether that's the US Treasury or some of the largest tech stocks that we see because those companies we all know are not going away. So explain that right, because I think people would say the NASDAQ might not necessarily always perform in lock step with treasuries. That's true. If you look at the historical correlation, higher rates, we think we're bad for tech companies. And that was definitely true in the nineties when most NASDAQ companies couldn't make next month's payroll without a fresh debt round. That's just absolutely no longer the case for Microsoft or Alphabet or Meta or NVIDIA, these companies are safe and sound and interest rates hurt some of their growth but not like. So it's interesting in the sense that the NASDAQ made up with the largest waiting, right, of some of these technology names and also the S and P might be in a more solid position than the blue chip dow. I think that's probably right and it's just a virtue of those companies are such an important part of our daily lives. It was only a few decades ago, we got rid of the railroad sector in the dow which although logistics are a big part of our day, we all have iphones and we use those a lot more than we do the railroads. So what do you recommend to clients as a chief investment officer and president at FM Investment? Should they be dipping their toes back into this market? And if so in what sort of way specific stocks sectors or even the broader indexes? So we still have a preference for the short end of the curve. We are asking folks and advising folks to take on more duration. So to look into longer end of bonds and the fixed income, we still think this year will be a major gain for fixed income across the board. But on the tech side, if you've been sitting in too much cash and you want to go back into the markets, we like the growth stocks and the tech stocks. Ok. And in terms of longer duration, are we talking three years, 10 years. So we've seen our primary shift focus from less than six to now the mid curve. So 57 years, I don't think folks unless you really want to see some price movement should go much beyond that for the time being. But the 10 years is always a great place to be. We've seen a lot of action in our products that work around the 10 year duration mark and think that's probably a good spot for the next few months. And that must be the expectation, I guess just for the next few months. But the expectation that rates will stay elevated, that's founded on that. We think rates stay elevated into 2024. That the pause is a prolonged pause and that cuts are going to happen when the fed says it is, which is not any time soon, right? Rate cuts, not a base case. Of course, that's what we've heard from the Fed, even though I think the stock market is still wanted to go higher. But you're right. The NASDAQ has been out performing in fact, these past four weeks. So we'll see how long that can last. Alex Morris, president and Chief Investment Officer for F Investments. Alex. Thank you. Thank you.