Fidelity on sticky inflation, and only limited Fed cuts – “market is like a spoiled child”

Fidelity Investments commented on their outlook for the Federal Open Market Committee (FOMC) and equity markets in 2024.

On the Fed:

  • “A few rate cuts make sense because inflation has fallen. I think it’s likely to be sticky at around 3%”
  • “The market is like a spoiled child. It gets a few and it wants more, and that’s a very typical situation that we’re finding ourselves in right now.”

On the equity market, he’s bullish, but wary:

  • interest rate cuts will keep the economy in a ‘goldilocks’ scenario
  • If the 10-year Treasury note yield remains between the 4% and 5% level, the stock market “will be okay,”
  • Equity valuations are priced in,a don’t thus corporate earnings will be needed next year
  • “The open question I think is one where if we see a rotation from The Magnificent Seven to everything that’s been left behind, and I do think that that is very likely, what kind of absolute trend does that produce?,”
  • “When 30% of the market gets rotated into all the cats and dogs that are on the 70% side, how strong can the index actually be?”

Fidelity is one of the largest asset managers in the world with around US$4.3 trillion in assets under management. Comments come from Jurrien Timmer, director of global macro, appearing on CNBC on Thursday.

This article was written by Eamonn Sheridan at Source