Joining me now is Danielle DiMartino Booth, Ceo and
Chief strategist for the Research and Analytics Firm Full Intelligence
. Danielle, it's great to have you on the
show especially as rates continue to be the topic of
conversation down here on Wall Street, some pretty decent
games across the board. What do you make of
today's action? Well, I I think that today
is really as simple as the benchmark U S 10
year treasury yield did not close with the number four
in front of it. And I think that that's
how focused stock market investors are right now on the
bond market to dictate the direction of market trading.
It really is all about. When is the feds
, you know, campaign of terror going to end
, when will fight, when will tightening finally end
? And what is your own forecast on that?
Of course, you are an expert for us on
the Federal Reserve. How many more rate hikes and
to what extent do you think borrowing costs continue to
rise? So I think it's fair to assume not
only that the fed is going to get to five
and a quarter percent by the end of the end
of this year, but much more importantly that it's
going to maintain high interest rates throughout the rest of
2023. And I think that that's something that markets
are really struggling with because the playbooks always dictated that
the Fed move in and lower interest rates very quickly
After it finished its tightening campaign. I don't think
that that's what's going to happen in 2023. Yeah
, I think a lot of people um reiterating Daniel
Daniel, your point there, right, that the
equity market does seem pretty optimistic about rates here,
but not necessarily consistent with what we're hearing from the
Fed. And of course, with the bond market
is telling us as well, what should an investor
do in this scenario? What's the best way to
manage their money? Well, I think, I
think investors should be very cognizant of how long they're
, they're able to keep their money in the stock
market right now. We are seeing movement by senior
citizens, people who are already retired, uh quite
a lot of movement into cash because now you can
get upwards of 5% for taking absolutely no risk on
. So I think you should be defensively postured in
the event that the Fed does push through with the
unexpected. And well, of course, a lot
more color from Fed chair Jay Powell who heads up
the hill on Tuesday for his semiannual congressional testimony from
what we saw released earlier today. The script of
that testimony. He's maintaining his narrative. The fed
is not finished. Yeah. Well, I do
want to run through some of the numbers here quickly
, Danielle just in terms of how things fair for
the week. So the S and P F 1.6%
looks like on the session. Obviously, that's its
best daily percentage gain since January 20th. The Dow
showing its first weekly gain since the end of January
and the S and P booking its biggest weekly game
since late January snapping that three week losing streak.
So again, we do see some optimism building here
, but it does seem that these inflationary pressures still
persist. Daniel. What can you tell us about
the state of play on inflation? I think inflation
, which is a lagging indicator which we should appreciate
. Bank of America came out this morning and announced
that they actually saw spending taper off after the second
half of February had come and gone. And we
also know from from I R S data that the
peak moment if you will in the month of February
of mailing out checks for income tax refunds, that
was in the week ending February the 17th. So
there's been a lot of extra money pumped into,
Into the economy in a very short period of time
. Of course, senior citizens got almost a 9%
increase in their cost of living. So a lot
of money was injected directly into the economy and that
spurred this kind of inflationary about what we're going to
have to wait and see is what the follow through
is given that we know that companies continue day in
and day out to announce more layoffs. You know
, I do have one question for you guys who
are a fed expert for us. Do you think
the fed has lost some credibility and being able to
control inflation? We've seen it come down on some
goods but a lot of people are saying that services
inflation is more sticky and might continue to rise.
You know, I think that the Fed trying to
change the goalposts in the way that they measure inflation
has certainly been, uh it's not been meaningfully bad
to their credibility, but it certainly has taken away
some of their credibility that the Fed needs to appreciate
how much money the U S government has continued to
pump into the economy because we understand that that was
the original uh fuel, if you will, that
, that got inflation started. And it's just now
that we're seeing that come off, you would think
there are two entities in Washington D C that the
Fed would be a little bit more aware of some
of the sources of inflation and have anticipated that it
would remain sticky for longer. Yeah, it's uh
look, it has been a disappointment, that's for
sure. Just in terms of, I think the
messaging campaign and what clearly has played out for Americans
and investors, Danielle DiMartino Booth, CEO and chief
strategist for Quill Intelligence. Danielle. Thank you.