Now, I want to bring in our guest to
Jay Hatfield, the Chief Investment Officer at icap.
Jay. Thanks so much for joining us this morning
. What's your reaction to how the markets have opened
so far? Good morning Chloe. Thanks for having
me on. Well, I think the market reaction
makes sense. You really have two major cross currents
going on right now in the market. The first
is we have a, a fundamentally flawed fed that
has a lack of ability of, of processing real-time
data. But there is one positive about the fed
is they're myopically focused on the labor market and the
labor market is weakening. So that's bullish. Now
, I would say we're likely to have a pause
in the May meeting which should be um very,
very bullish, but the offset to that and you
saw it in the market yesterday is there's some fear
that we're going to have a recession. So cyclical
stocks got hit pretty hard yesterday. So those are
the two cross currents. And today is a good
example where they're kind of canceling each other out.
You know, speaking of employment, obviously a big
week for that, we've got the non farm payrolls
jobs report coming out on Friday. Typically, we
see ad P giving us kind of a peek into
what that could look like. Obviously, with the
exception that it's not always the case, especially when
we're looking at January Jobs numbers and there was no
indication we'd have that big beat. So based on
what we've seen so far, what are you expecting
to see on Friday is that jobs report going to
reflect all the layoffs that we've been hearing about across
industries. We think it, it's more than likely
to print. Cool, particularly you're starting to see
layoffs outside of tech, Disney is more of a
media company mcdonald's, uh the construction, commercial construction
industry is going to slow down. So we've been
expecting that the only caveat being that particularly in the
first quarter because of weather effects, oftentimes the data
can be misleading initially and then gets revised. But
all things being equal, we do expect it to
weaken and like I said, that will be bullish
because that will put the on hold. Now you
mentioned that you said the Fed is 100% wrong about
inflation being too high. What kinds of factors are
leading you to believe this? Well, this is
really the the critical issue is the fed learned all
the wrong lessons from the seventies, the seven seventies
inflation and I guess most of your viewers might be
fortunate enough to not remember that, but it was
driven by um housing inflation which is caused by the
FED. But more importantly, two gigantic almost unimaginable
energy price shocks because Energy bleeds into core core inflation
. So instead of the Fed, focusing on those
two items and by the way, both of those
are cooling off, housing is down about 6% on
price which translates into rents. Energy prices are 50%
off their highs natural gas prices, 80% down.
So those are super bullish, but the Fed is
clinging to their flawed Phillips curve theory, which is
all focused on employment, which is a lagging indicator
. So that's the problem is the Fed didn't learn
the right lessons from the 70s. Now, Jay
also, you mentioned fear of recession here. Some
experts already anticipating are already saying that we are currently
in a recession. What do you expect that to
look like? Based on the data, we've seen
how bad could it possibly be? You know,
obviously Americans getting worried about this. Well, Chloe
, I would go back to the housing sector again
. That's the most sick and that's the sector that
federally impacts. And so in oh seven oh eight
, that was horrific because we had, we were
building about 3.5 million homes uh per year, we
had 4.5 million total. Well, now we only
have 1.5 million homes for sale. That's an all
time low. So the what normally happens in a
recession is mass layoffs from both housing and autos,
both those sectors. We have a shortage. So
we don't think it's going to be a deep recession
. We think we'll be, have roughly flat growth
and then, uh looking forward to next year,
we think we'll have normal growth. So that's why
we continue to be bullish on the market and our
target on the S AND P which has been true
since the beginning of the year is of uh 4500
with some upside risk. I'd say, as people
get excited about tech stocks and A I, Jay
Hatfield, Chief Investment Officer at I thank you so
much for joining us this morning and for your insights --> .