Rhys Williams, chief strategist at Spouting Rock Asset Management, joined Cheddar News to discuss Thursday's market gains on the heels of the Fed's rate hike as well as earnings reports from the tech sector.

Closing Bell

Stocks Up on Heels of Fed Move, Tech Earnings

Joining me now is Rhys Williams chief strategist at spouting rock asset management, Reese it's good to have you on the show. Great day of gains for the NASDAQ of course, in the wake of that Fed decision and the positive outlook from meta, How does this set us up in the stock market? Well, I think what you, what you saw was an example of positioning really. I think people were underweight the fang stocks particularly facebook, probably given the uncertainties. Um and all of these companies and I know most of them are, many of them are about to report in about two minutes, but all of these companies have, you know, tremendous modes, but none of them have particularly cared that much about expenses over the years because they had such great businesses, they didn't need to. Um so, so now you're gonna, I think separate the fang stocks by, you know, who is going to get more aggressive on cost cutting and efficiencies as you mentioned Kristin. Yeah. So where does that leave us? I mean, do you have picks Reese within the technology space as to where there might be winners and losers. Yes, I have. I have trouble mentioning individual names unfortunately without compliance control, but I would say I'll be listening closely for these calls tonight because I do think um all of them have taken baby steps. The three big ones that are purporting tonight, google um, amazon and an apple, but none of them have gone after cost the Zuckerberg talked about yesterday. So if anybody decides to get that aggressive, you know, potentially you could have a very strong report earnings earnings expectation and price momentum tomorrow. Okay, so great. I'm glad our producers are showing this year to date, meta up 23% amazon up 23% Apple up 16%. And I think the takeaway here Two is we've seen decent gains reach across the board in 2023, but especially the NASDAQ, it's been outperforming is up double digits this year and that momentum in January continuing into these first few days of February, the momentum that we saw in January. Can that set us up very positive here in the stock market? Especially after what was such a dour 2022? Yeah, well I think that's part of it. Remember these stocks are up in january, but if you look at amazon over a couple year period, just as an example, it's it has not been a great stock. So I do think, you know, you had fairly low expectations and and low price performance over the last couple of years. So if anything goes right, um you know these stocks you could start to work. What about the path forward for inflation reason how that impacts the federal funds rate i. E. Borrowing costs. What's your outlook there? Well, we think actually that the market probably is a little too overexuberant in terms of, you know what Powell said, if you kind of look what he said, you know, he did not say he was not going to raise rates anymore. Uh he didn't push back very hard and I think I think really we what Powell did was instead of being the paul Volcker Rambo type Fed chairman, he became more of a captain Sullivan Fed chairman. You remember Captain Sullivan who landed the U. S. Air jet into the Hudson river when he didn't have an engine and everybody survived? Um So I think that was there was low expectations that you could pull this off without a recession now there's higher expectations, frankly and and the markets responding to that. But I do think that that Powell is not convinced that it's over. And so I would I would assume that for the next, you know, month or two everybody can believe what they want to believe, but by the second half of the year, if interest rates aren't being cut, the market may readjust to that. But I think we're sort of in this honeymoon period where people can believe what they want to believe right now. Okay, so let's talk about sectors Reese that look attractive to you. I know you can't name specific fix but are their broader sectors, even international stocks perhaps where you do see opportunity? Well, I think the consensus has been that the dollar has peaked. Um And you know, we would actually probably look the leg in for the next mini dollar rally because I think it's it's probably a little too crowded right now that you know the dollar is as peaked and is going back down. Um But I do think that that certainly international growth should be pretty strong. We like china a lot. We do think that there will be a probably starting as early as mid february and increase in in economic activity as everybody's gotten covid now. And you can you remember how the U. S. Responded to uh covid measures once they once they stopped and people went out and and and went to restaurants. And so I do think that exactly things going to happen in china even maybe even more on steroids because they've been locked down for three years really. Um So I do we would expect china to be good. We also like uh India and we like we like brazil. Um And the reason for brazil is actually on the commodities exposure to china, china re accelerates in the second half of the year. Alright, Rhys Williams chief strategist. It's spouting rock asset management. Reese, thank you for joining on a mixed day for stocks