All right, with all three major industries putting in
the green, I want to bring in Brian Levitt
, global Market strategist at Invest Brian. Thanks so
much for joining us this morning. What's your reaction
to how markets are behaving on this last trading day
of the week? It seems like the markets are
viewing it as a soft landing type of report.
I mean, for all the concern that we've been
having over all these rate hikes over the last year
plus is, well, what's it going to do
to the economy? What's it going to mean for
the unemployment rate? And we're seeing inflation come down
, inflation expectations in the bond have come down meaningfully
, which is good signs and the fact that the
jobs market is still relatively resilient is a positive.
Now, can we navigate the soft landing remains to
be seen? It's a challenge but this is a
report that the market can applaud. Absolutely. And
yeah, let's dig into that report a little bit
more here, you know, obviously more jobs added
than anticipated on the back of the jolts report showing
job opening shrinking. A showing of course more private
jobs added. What do you make of this?
Given the widespread layoffs that we've been hearing about,
which have been hitting industries across the board? Yes
. I mean, there's some demand in different sectors
and there's loss of jobs in other sectors. So
you're seeing tech or some of the COVID winners which
had front run it or really added a lot of
workers for the demand that they saw in 2021 only
to over hire versus places in the market like leisure
and hospitality that still struggle to find some workers.
So it really depends on which sector or which industry
that you're looking at. Look, we want to
be clear here though. I mean, this is
an economy that's going slow, jobless claims are picking
up. So we shouldn't expect to see jobs reports
that keep outpacing expectations. But, and it's critical
, it's an economy that's remained resilient through all the
forecasts of a recession, all the concerns about tightening
. So it's a positive, but investors should expect
growth to moderate from here. All right, Brian
and the fed hiked interest rates, as we mentioned
the 10th consecutive time since March of last year,
in spite of that risk of a recession that we've
been discussing. What do you think that that sort
of means moving ahead? Are we going to see
any based on polls commentary? Do you expect we'll
see another rate hike? Will we see any cuts
or are we going to maintain this level? I
think we're on hold for a while. I mean
, we've seen inflation expectations come down. We have
the consumer price index trending in the right direction and
we're dealing with bank challenges. I mean, every
policy tightening environment ends with some type of accident somewhere
. Unfortunately, you can look back at all the
years 88 89 with the savings and loans, 506
107 with the housing crisis. So it always ends
in some type of incident. We're seeing it right
now and that crisis typically marks, you know,
getting closer to the shift in policy. And so
the Federal Reserve would typically be already easing. Now
, had we not seen the COVID style inflation that
emerged as inflation comes down, the Federal Reserve will
shift in the meantime, you know, they say
data dependent. But for my expectation, I believe
we're on pause here for a while now, we
got a fresh batch of corporate earnings out, apple
beating expectations here despite actually seeing sales overall falling for
the second consecutive quarter. What do you make of
the results from Apple? Well, very strong and
a reminder that the supply chain challenges are have eased
and a reminder that consumer demand continues to remain strong
earnings overall have actually been better than expected. So
whether it's, you know what I've been telling people
is last year was a year in which things got
generally worse relative to expectations. Inflation, worse policy
tightening, worse Russia going into Ukraine worse outcome.
This is a year in which things are getting bit
better relative to expectations, earnings and growth remain resilient
. Inflation is coming down, feds either at the
end or very close to the end of the tightening
stance. So good signs again, it doesn't mean
we're through this. We still need to see all
the lagged effects of policy tightening. But, but
a day in which the markets can breathe a bit
of a sigh of relief that so far the economy
and earnings remain resilient despite all of the tightening.
Absolutely, Brian. Now, moving ahead, you
know, obviously, we have this looming risk of
a recession here. No telling if that will happen
, what it might look like. But given the
volatility and the uncertainty in the markets, what sectors
are you watching that you would advise investors to keep
an eye on as well. Well, if you're
worried about a recession here, then you want to
be a little bit more defensive, you want to
push up in quality and defensive sectors like health care
and staples and anything that's more rate sensitive will be
your friend in a slowing economic environment. So it's
ok if investors want, if they're tactical and they
want to be a little bit more defensive here.
But really, I think investors should be thinking out
over the next couple of years. Typically when you
see inflation peak, when you see the end of
policy tightening, that suggests that markets have tended to
do well over the next couple of years. And
that suggests that a new cycle will emerge and a
recovery will play out in a recovery. You want
to be more cyclical. So we may not be
there yet. You know, we still have some
challenges to get through. But over the next couple
of years, investors will be better off in cyclical
sectors like industrials, like materials, even financials.
But, but you know, we may have a
few months of challenges before we get there. Brian
Levi, global market strategist deco. Thank you so
much for your time and your insight this morning.