Sam Stovall, Chief Investment Strategist at CFRA, tells us what to expect as the month of January comes to a close, and whether or not recent market volatility is at all indicative of how the year will likely forecast.

Wake Up With Cheddar

 Markets Volatility Threatens End of January  

Let's bring in SAm Stovall, chief investment strategist over at CFR a SAm Good morning. Great to have you here. As I mentioned, january? Not off to the best start for the market so far? Uh, Last week alone, the S and P had its worst week since March. The NASDAQ already down 12% this year. Couldn't make a comeback. Or is this all indicative of sort of the year for that? We're gonna likely see this year? Well, I think it is indicative of the kind of volatility that we should experience this year. But if history is any guide, it's certainly not gospel that we could actually see a bounce back. This is the 21st time since World War II that the prior year was up 20% or more. And historically, in that subsequent year, the market has declined Each time by 5% or more. Right now, we're down what? 8.3%. And history also then indicates that whatever we've had this kind of a digestion early in that new year, we have recovered fully 100% of the time. Um, so at least histories, President says that the volatility is likely to remain elevated. However, we probably will get back to break even before the year is out. Sam obviously, all eyes gonna be on that Fed policy meeting this week, Wednesday will likely get sort of the any any indication from jerome Powell about what he plans to do with interest rates. Again, the expectation anywhere from 4 to 5 potential interest rates this year, Maybe about a quarter percent. What are you expecting to hear Wednesday? And do you think maybe we'll get some interest rate hikes? Maybe in february? I don't think we'll get one in february. Our belief is, it will be at the March meeting. Yes, we do think the Fed will raise four times by 25 basis points or one quarter of 1% each time. Uh, so four for the entire year. Our feeling is that the Fed uh realizes that is behind the curve in terms of inflation, that we're probably going to see inflation peak in the january and february readings because both are expected to show a 7.3% year on year rise, but then start to come down to about 3.5% by the end of this year and 2.7% by the first quarter of 2023. So I think that the Fed will start to raise rates. Obviously they are going through their tapering program. But the real question is how quickly will they start to unwind their balance sheet? And I think investors are worried that they're going to have all three occur pretty close to one another. And that's what's unnerving investors right now. Also this week, we have a slew of earnings to get through this week, I believe about 1/5 of companies in the S and p are reporting their earnings just this week alone and we've got some big ones SAm Microsoft Tesla, Apple IBM all reporting this week. Do you expect any sort of big titanic news this week? That will change the markets kind of what we saw with netflix last week, when netflix's earnings came out, it had this effect that all of a sudden Roku, Disney, all these other companies went down. Do you expect that will happen with any of these companies this week? Um no, I don't actually, we're probably going to see continued good strength from Microsoft. Also hear about its planned acquisition of activision blizzard. I think Tesla, we are going to see strong results, good guidance for 2020 to uh, see a lot of movements from the three series to the Y series. So I think in general, of course, nobody really expected a big surprise from Netflix last week, but heading into these tech stocks this week, uh, the same is the case where we could end up being surprised, but right now, our belief is we won't. Alright, good stuff. Sam Stovall, chief investment strategist at CFR A SAM, thanks so much have a good rest of your monday