Rob Haworth, Senior Investment Strategy Director at U.S. Bank Asset Management Group, joined Cheddar News to discuss what consumers and investors are watching ahead of Wednesday's Fed minutes and Black Friday. 

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Stocks Open Higher Ahead of This Week's Fed Minutes

I want to bring in rob Hayward senior investment strategist at U. S. Bank wealth management robert, thanks so much for joining us this morning. What are you watching from the markets today? Yeah, for today, we're really looking to see how they react to uh really we're looking ahead more to tomorrow's news. We're not getting a lot of news today. I think the trend is still generally up here in the equity market, but we'd be a little more cautious because as we look at fundamentals the challenges while inflation is slowing, it's still very high. And I think there's a question as to how much growth do we really get early in the new year? Now. We've been talking a lot this morning about sort of mixed Fed messaging from various Fed officials across the country. We do know that the Fed is dropping hints that inflation might be tapering off. Do you think that there's a mismatch between what the Fed is telling us and we're hearing compared to how the market thinks the Fed is going to react to this data? Well, I think the market prices we're seeing, tell us in our own expectations tell us we're probably getting another point in a quarter of rate hikes into the middle of next year, getting to 55 and a quarter is where we're seeing the market price. That's certainly on the low end of what James Bullard was talking about earlier in the week when he talked about a criminal rate in the 5 to 7% range, but we think that maybe enough over time to help soften inflation, I think, I think the challenges the labor market remains fairly strong and consumer balance sheets remain fairly strong. So we're gonna have to see how quickly inflation can really soften in the face of what are going to be some fairly robust interest rates in time here. Yeah. Robin, the Federal Reserve Minutes will be out tomorrow. What are you anticipating to find out Wednesday? What's likely to be the kind of final piece of news in this saga before we head into the thanksgiving holiday here? Well, we're not really expecting much out of the minutes, especially because as you know, we've had so many speakers on the tape really emphasizing their data dependence uh and that they're they're very open to maintaining high interest rates for some time, whether it's slowing to a half point hike in december, which is really what we're thinking or do they need another three quarters of point hike? They're going to be looking at the jobs data for november that we're going to get in in very early december and they're gonna look again at another inflation print. Really. I think so. So minutes are probably gonna be uh not particularly impactful unless there's something surprising just because we've had so much from the press conference and and from speakers in the last week rob black friday is just a few days away, even though we've seen sort of some mixed earnings results from, from the, from some of the major retailers and big box stores. So what's your outlook for the retail sector and consumers ahead of this major shopping event? Well, consumers really look to be in fairly good shape. I think if we look at the recent retail sales report, we look at recent earnings, consumers are still spending. Now. That doesn't mean that it's not without a cost, but they are still spending. Um it looks like to us that they're really focusing still more on experiences than goods. So there's going to be some pretty sizable bifurcation probably in the spending trends as we look at this holiday season, but spending could still be up a couple of things we think about in that in that vein are one. Consumer balance sheets still remain pretty solid, especially when we look at the overall level of savings, not the savings rate, right? Not how much they're saving out of their current income, but rather how much they have in the bank. That's still fairly robust. Yes, we're seeing credit card loans tick up fairly sizable, but it's still modest relative to overall trends. So the consumer looks to be in fairly good shape and while they may be looking for some bargains this shopping season, the the overall level of spend is probably gonna be okay. Now, investors are watching, as I mentioned, earnings reports from more major retailers this week, from dollar tree to best buy. What do you make of the overall health of the retail sector, now that major retailers have started to and are continuing to report third quarter earnings here. Yeah, we're seeing it as fairly mixed um at certain ends of the spectrum where where there's a lot of discretionary goods, it was certainly a challenging, challenging third quarter and we're not getting great guidance into the fourth quarter yet they're all looking fairly cautious. Um But we did see some surprising news last this week from the home improvement sector, from, from the staples sector. If we think about some of the big box retailers there, I think the challenge is going to be our consumers going out there and buying more TVs, more electronics, more goods that may not be the case. What we're hearing from projections is uh those sorts of sales are probably gonna be flat to lower. Um and consumers are really looking to shore up their experiences spending and things, they need to have those experiences ahead. So, you know, earnings are probably gonna be pretty mixed um across the whole sector now, as we head into the end of the year here, what sectors are you watching and how are you advising your clients in terms of investing at this time? Yeah, even as we head into the end of the year, we're staying a little cautious and really what we're thinking about is is one inflation probably mains remains fairly solid. And so too, there's more of an earnings reset ahead. As we think about the broad the broad economy, we look to be more defensive in nature looking towards global infrastructure, things like utilities, midstream energy where we, you know, we have fairly low inventories of energy and demand is probably gonna be okay um to emphasize there and then we tilt a little more towards bonds looking at that shorter maturity, higher quality segment for the moment as we think that inflation is somewhat elevated. Rob Hayworth, senior investment strategist at U. S. Bank wealth management. Thank you so much for your time this morning.