The ‘high tide’ of 2024 is over: Buy the dip & ‘be tactical’

00:00 Speaker A

The Federal Reserve holding interest rates steady and sticking with its outlook for two rate cuts this year despite expectations for higher inflation and slower economic growth. Joining us now, we’ve got Ken Mahoney, Mahoney Asset Management CEO and Jeffrey Roach, who’s the LPL Financial Chief Economist. Great to have you both here with us. Jeffrey, I want to start with you. How are you digesting and assessing what we heard from Fed chair Jay Powell at the conclusion of the FOMC meeting?

01:03 Jeffrey Roach

Well, I think I I read Powell’s comments uh real similar to how I interpret uh just this morning’s release out of the Bank of England. Uh so it’s not just a US problem. It’s around the world. I think of it in in two main risks. One risk is the uncertainty on trade and the second major risk is the stagflation story. And so it’s it’s an issue in Europe, it’s an issue domestically. I think looking ahead, you have to look at some of the the upper income consumers. Can they keep carrying the economy along like they have the last couple years? But uh in in sum, those are the two risks. We’ve certainly downgraded our GDP growth forecasts really after January’s weak retail sales numbers. So we’ve been under a 2% number for Q1 GDP uh for a while now. But uh those are those are the risks, certainly a lot to unpack.

02:46 Speaker A

So then, Ken, what trade does that initiate? Because the market was initially a little bit bullish after the Fed meeting. Now obviously we’re seeing stocks selling off. The Fed meeting was a little bit meh in terms of the thesis and takeaway. Where does the market go from here?

03:07 Ken Mahoney

Yeah, it’s funny you say meh because you know, you think about it just in context you say, wait a second, growth is coming down and inflation’s going up. We want to reverse that, right? And I can’t believe, by the way, they used the word transitory. Are you kidding me? Give the guy thesaurus. How about temporary? I mean, the word, you know, transitory gives me the heebie-jeebies, like 21, 22, they said it was transitory and it was sticky for some time. So again, I’m not sure, you know, what happened yesterday is going to should take a major change in portfolio. I think the Fed put is still there, but remember, I just I’ve been saying since beginning of the year, be careful what you wish for. We came into this year, everybody wanted two cuts, three cuts, four cuts. I said, you don’t want any cuts. You want earnings growth, you want a strong economy, and you don’t want to see a whole bunch of cuts, but here we are. I still think especially after this forest fire that we’ve had the last several weeks, you still want to go with the big names, the Microsoft, the Apple, uh uh Nvidia, you know, kind of the companies that that are liquid. That’s where institutions are going to come into. And if they’re wrong, at least they’re liquidity, they could hit the bid. So I I still think it’s bigger is better uh coming out of this. I think that kind of reaffirms what what kind of uh Powell said. Uh and for our clients, again, we’re looking to buy on dips, um and and try to be tactical because this is not going to be a 2024 where a high tide lifts all ships.