Gene Goldman, Chief Investment Officer at Cetera, joined Closing Bell to react to comments from Fed Chair Jerome Powell, following another interest rate increase of 75 basis points from the U.S. central bank.

Closing Bell

Fed Chair Powell Signals Rate Hikes May Slow after September Meeting

want to bring back in Gene Goldman, chief investment officer at cetera. Gene the feature had a lot of important comments to say in this press conference. It's still ongoing, but what is stuck out to you so far? Yeah, I think first of all he's done a better job at this conference than the last one. And you know, three things that stuck out and he, the most important thing is that he crossed off of our list, everything that we were looking for. So the three things that we wanted and he talked about number one clues on future Fed policy, basically he, if you think about what he's done in the past has been very sort of like very focused and saying, you know what, I'm gonna be very specific and this is what we're gonna do in the next meeting, which is crazy because think about the last two meetings he gave came out and said, I'm gonna, we're gonna raise rates by this or by that and the ensuing meetings, the data is changing so much. So today he had an aha moment where he's like, listen, I'm not gonna be specific, I'm gonna be very data dependent. So we love that fact, he's gonna signal data dependency and be very nimble, love it, love it, love it. Number two. He talked about the impact on the economy. Clearly the feds, watching the data very, very carefully. You know, he was very balanced. He talked about um optimism around supply chains but also talked about recent declines in spending and production indicators, but still at the same time highlighting the labor market. So very much watching the economy. The third point we want a little more clarification on, but we'll give him a pass on this. We want more discussion around inflation. He did talk about headline inflation rolling over a bit but kind of skirted the question in terms of sort of that core inflation, where is it going? How is the Fed gonna watch it more carefully? I think the most important point is that we are in a very much of an uncharted Fed water right now because the Fed, as he alluded to, the Fed is raising rates this year. And then if you look at the markets, the markets expect the Fed to cut rates next year. You know, I've been in this industry since 1993 it's an unprecedented type of sharp move higher and sharp move down uncharted waters. So what we've been doing to kind of take all this information, we release what's called the Fed monetary. It's on our website at dot com. We take all these data points and say here's what the Fed is doing here is what they should be just taking inflation readings, taking employment readings, market rings and squeeze them together. And right now, given the uncertainty around the Fed, it's so very important. Yeah, there's a lot of uncertainty and I think um despite the stock market rising, jean clearly to what I see is now session highs great. We have it on the screen there, the NASDAQ up nearly 4% the S and P up 2.5%. The dow up 1.4%. You and I have discussed this before the press conference saying that, yes, this is the normal activity. Post Fed decision stocks do rise pretty significantly. But then the next day, the next two days, the next few weeks can tell a much different story. So we'll wait to see how this shakes out. But I'm glad that you did mention the uncertainty because one unsettling comment is the technology that there's more uncertainty, significantly more uncertainty. Powell said about the path forward for the economy right now and that it is very hard to say with any confidence what the economy will be like in 6 to 12 months now. He did say he doesn't think we're currently in a recession right now. But the path to a softer landing has actually narrowed. And so if you are an investor, what would you recommend people do in this environment? Yeah, I think the number one thing to focus on is be extremely diversified because there's so much uncertainty. If you look at our portfolios were overweight value relative to growth. We are very diversified. We've also recently increased our interest rate duration, increased duration expecting that we've got the top rates for this year, especially as the Fed raises rates and puts downward pressure on long term yields were also reducing our exposure to non us. I think europe is more of a likelihood chance to be in a bigger, deeper recession, especially the news we got this week. So if you overall we're cautiously optimistic, we're very diversified. One thing we've been sort of nibbling on a little bit more. I know we're overweight value versus growth that we've been going a little bit more into growth. We think some of the growth things that you talked about in your earlier session last night. Technology is not as bad as people are claiming. Plus if we need to raise productivity to combat inflation, when you do you buy technology, you prove your your factory processes, technology, productivity and today's durable goods report was a phenomenal report, huge spending, especially on the bigger gigantic, enormous machines. Very positive technology right now. Okay, Technology is certainly outperforming today as well, jean as we did see that 10 year treasury yield take a little bit lower. Um, I do want to talk about the path forward for rates because I think that's why the stock market is up so dramatically because the Fed basically indicating that collectively by year end, we're in the middle of the year, roughly end of july that we could see the federal funds rate rise by another full percentage point on average from here. But considering the pace of rate rises that we've seen these past few meetings, that would indicate that the rate of these hikes would start to slow down and I think that's why we see the stock market up. What's your take on that? I totally agree. I mean, I think if you look forward, there's three more Fed meetings, three more planned for it means their September, November and December are expectation. Our base case is 50 basis points, so half of 1% in September and then November December 25 basis points each. The big sort of uncertainty is that September meeting because it's we're looking at 56 days between now and that meeting. Yes, we'll have Jackson hole in late august. That's gonna be a great way for the Fed to kind of tweak expectations. It's a long ways away. But again, a 1% move higher in rates from these levels seems to make sense. Again, this is what the Fed said in the dot plot is consistent with the story. But again, the data changes so fast and so quickly jean, thank you so much for joining on this very important Fed decision day. A lot of nuggets from the Fed chair there and that is Gene Goldman, chief investment Officer at Sutera