Danielle DiMartino Booth, CEO and chief strategist of Quill Intelligence, joined Cheddar News to discuss the market that is still digesting comments from the Federal Reserve about its monetary policy.

Closing Bell

Dow Shows First Weekly Gain Since Late January

Joining me now is Danielle DiMartino Booth, Ceo and Chief strategist for the Research and Analytics Firm Full Intelligence. Danielle, it's great to have you on the show especially as rates continue to be the topic of conversation down here on Wall Street, some pretty decent games across the board. What do you make of today's action? Well, I I think that today is really as simple as the benchmark U S 10 year treasury yield did not close with the number four in front of it. And I think that that's how focused stock market investors are right now on the bond market to dictate the direction of market trading. It really is all about. When is the feds, you know, campaign of terror going to end, when will fight, when will tightening finally end? And what is your own forecast on that? Of course, you are an expert for us on the Federal Reserve. How many more rate hikes and to what extent do you think borrowing costs continue to rise? So I think it's fair to assume not only that the fed is going to get to five and a quarter percent by the end of the end of this year, but much more importantly that it's going to maintain high interest rates throughout the rest of 2023. And I think that that's something that markets are really struggling with because the playbooks always dictated that the Fed move in and lower interest rates very quickly After it finished its tightening campaign. I don't think that that's what's going to happen in 2023. Yeah, I think a lot of people um reiterating Daniel Daniel, your point there, right, that the equity market does seem pretty optimistic about rates here, but not necessarily consistent with what we're hearing from the Fed. And of course, with the bond market is telling us as well, what should an investor do in this scenario? What's the best way to manage their money? Well, I think, I think investors should be very cognizant of how long they're, they're able to keep their money in the stock market right now. We are seeing movement by senior citizens, people who are already retired, uh quite a lot of movement into cash because now you can get upwards of 5% for taking absolutely no risk on. So I think you should be defensively postured in the event that the Fed does push through with the unexpected. And well, of course, a lot more color from Fed chair Jay Powell who heads up the hill on Tuesday for his semiannual congressional testimony from what we saw released earlier today. The script of that testimony. He's maintaining his narrative that the fed is not finished. Yeah. Well, I do want to run through some of the numbers here quickly, Danielle just in terms of how things fared for the week. So the S and P F 1.6% looks like on the session. Obviously, that's its best daily percentage gain since January 20th. The Dow showing its first weekly gain since the end of January and the S and P booking its biggest weekly game since late January snapping that three week losing streak. So again, we do see some optimism building here, but it does seem that these inflationary pressures still persist. Daniel. What can you tell us about the state of play on inflation? I think inflation, which is a lagging indicator which we should appreciate. Bank of America came out this morning and announced that they actually saw spending taper off after the second half of February had come and gone. And we also know from, from I R S data that the peak moment if you will in the month of February of mailing out checks for income tax refunds, that was in the week ended February the 17th. So there's been a lot of extra money pumped into, Into the economy in a very short period of time. Of course, senior citizens got almost a 9% increase in their cost of living. So a lot of money was injected directly into the economy and that spurred this kind of inflationary about what we're going to have to wait and see is what the follow through is given that we know that companies continue day in and day out to announce more layoffs. You know, I do have one question for you guys who are a fed expert for us. Do you think the fed has lost some credibility and being able to control inflation? We've seen it come down on some goods but a lot of people are saying that services inflation is more sticky and might continue to rise. You know, I think that the Fed trying to change the goalposts in the way that they measure inflation has certainly been, uh it's not been meaningfully bad to their credibility, but it certainly has taken away some of their credibility that the Fed needs to appreciate how much money the U S government has continued to pump into the economy because we understand that that was the original uh fuel, if you will, that, that got inflation started. And it's just now that we're seeing that come off, you would think there are two entities in Washington D C that the Fed would be a little bit more aware of some of the sources of inflation and have anticipated that it would remain sticky for longer. Yeah, it's uh look, it has been a disappointment, that's for sure. Just in terms of, I think the messaging campaign and what clearly has played out for Americans and investors, Danielle DiMartino Booth, CEO and chief strategist for Quill Intelligence. Danielle. Thank you.