저자: HollyNewman · 외국인
요약 보기
연준이 다음 주 금리 인상을 기정사실로 보며, CPI 서프라이즈가 긍정적이지 않는 한 방향은 바뀌지 않는다는 입장. 실적(Q2 기대치 50%+ 상회)과 AI 투자가 뒷받침하므로 주식시장은 견딜 수 있고 성장 여력이 있다고 봄. 다만 4분기 변동성은 확대될 것으로 전망하며, 이민 소형주·신흥국(중국·대만·한국) 비중을 확대하고 유럽은 축소하는 포지션을 설명. 사회자 Jeremy Siegel은 인상 후 채권이 긍정 반응하고 주식은 짧은 조정 후 회복할 것이라고 주장.
다듬은 글
I wouldn't want to be Kevin Warsh next week. According to Holly Newman, every Wall Street analyst expects the Federal Reserve to raise interest rates next week. But Jeremy Siegel also thinks it will be positive for stocks. I'm Edison Please, before we start, let's watch this video where Holly Newman and Jeremy Siegel explain everything in more detail.
If we look at how the markets are taking the CPI, let's bring in Newberger Managing Director and Senior Wealth Advisor Holly Newman Croft. Welcome, nice to see you. Thank you. It's always nice to be here. So does it change anything for you if the Fed starts hiking next week due to a higher CPI? No, I mean our expectation, as well as the market's, is that the Fed will raise rates next week.
I think the CPI would have to really surprise positively for them to change course. As Steve said, the market has been patient, the Fed has been patient, and we saw the ECB just raise rates again, this is the second hike with a third expected by the end of the year. So I think to maintain credibility, the CPI is not the only indicator the Fed looks at.
There's a lot of data, but the protracted conflict that we can perhaps already call the Iran war, you know, it started as a 6-week war, and now there's talk that it could last until the end of the Trump administration. Oil prices are much higher, exceeding $100. This is a critical landmark. 10-year bonds briefly crossed the five mark.
Um, these are all critical tipping points. Yes, concerns about inflation. Do you think the market will hold up? Does it add volatility if the Fed raises rates? Well, that's two questions, right? I think the market can and will hold up . We see this today. What we are seeing today is truly a relief rally.
Um, it's a relief that the CPI didn't turn out to be a terrible indicator, but, you know, the market really relies on earnings. And the earnings, we all know, the Q2 earnings significantly exceeded expectations, by more than 50%. This followed Q1 earnings , which also significantly beat expectations.
And we see that analysts are now revising their earnings forecasts for next year upwards . So, with solid earnings and stable AI spending, that's what the stock market is looking at. And it has proven its ability to withstand higher inflation for a very long time. And we still believe that the stock market has potential for growth.
Your argument about forecast revisions brings us back to discussions about what happened in 2022, when the revisions were overly optimistic , and then boom. I mean, partly because of the Fed. I wonder if you think that's fair? Druckenmiller argued yesterday at this Piper conference that we can make super profits because this AI development, he said, will eventually end.
It will end, and we don't think that's going to happen anytime soon , but that brings us back to the second part of Sarah's question about volatility, and we do think it's going to go up dramatically, right? We have a war, a midterm election, and almost certainly a rate hike next week. So , as we enter the fourth quarter and move towards the end of the year, I think volatility will increase.
But the strength of not just corporate earnings but corporate balance sheets, we just think there's room to move right now. More compression multipliers? More than we've seen this year? Maybe, maybe, and maybe not. It's uncertain, but I think the market fundamentals support the argument that this isn't just a return to expanding multipliers.
This is fundamental, and these companies have a margin of safety. So, in terms of where you're currently investing client funds, just remind us how you allocate assets between AI and other sectors, as you've typically favored small- cap companies, international markets, and other undervalued segments.
Yes, look, we are constructively positioned towards a global diversified equity portfolio. We have a higher proportion of small- cap but high-quality companies because, for a number of reasons that we're talking about today —like rate hikes— those companies can be heavily leveraged, and if you have a weak balance sheet and a lot of debt, your interest costs will go up.
So, quality small- cap companies; We still like emerging markets , where the AI trend has not yet taken off like it has in the United States. Therefore, we see many opportunities in China, Taiwan, and Korea . We retreated a little . We have slightly reduced our share in developed international markets, especially in Europe.
They depend on energy sources, and we are seeing a slowdown in growth there. So, a little underweight, but overall we are very optimistic about a diversified global equity portfolio. So, even if the Fed raises interest rates, the market still has some way to go. So, don't be afraid. Now let's see what Jeremy Siegel has to say.
You know, I definitely wouldn't want to be Kevin Warsh next week. This is a situation: no matter what you do, you will still lose. If he raises rates, and the market, I think , insists on it, then President Trump could throw a tantrum. Well, I mean, he already said: if you lower the rates, I'll be furious.
So, whether he raises the stakes or not, you decide. Listen, we've always said that the market tests new Fed chairs. And I think this is exactly the kind of test for Kevin Warsh. The 10- year bond market is heading towards five percent. Futures clearly signal the need for an increase. I think he would really like to wait until the midterm elections are over to maintain some trust from Trump, but the situation is very, very complicated.
What will he do? What do you think he will do? Oh, why? I'm just on the verge of making a decision. You know, I think he's going to go for it and raise the stakes, because if he doesn't, there could be four, five, or even six dissenting votes, which would be unprecedented. Now let's assume that we get CPI data tomorrow.
This might calm them down a bit. Only a few days left until new data appears. Waller effectively drew the line by saying, "Well, if it 's 0.2, I might agree to leave the rates unchanged." " If it's 0.3, then they'll probably have to be raised." But if you look at commodity indices, what's happening with oil, and most importantly, with bonds, it becomes clear: rates simply need to be raised.
And so, I think, this is the main conclusion. Okay, if you're right and they do it, how will the market react? I think the market will first shudder, there will be a sell-off, and then, as I expect, long-term bonds will react positively, as if to say: okay, the Fed is able to fight inflation. We will see a recovery in the stock market.
I think this will be a kind of cold shower: " Wow," but it was necessary, so let's get it over with . You know, 25-50 basis points in the short term, if they do it now and in October, it's not the end of the world, and it would let the market know that the Fed is serious about fighting inflation. Perhaps this will force the " bond watchdogs" or convince them to just wait.
I think so, otherwise they will scream at the top of their voices. Yes, I... Even if the Fed raises interest rates, the market still has potential for growth, so we can remain optimistic. Now let's take a look at this article from the Wall Street Journal that explains why the Fed will raise rates more than once.
Now let's look at this article from the Wall Street Journal. The headline suggests that the Fed is preparing to raise rates. It's rarely limited to one time, right ? Investors are already pretty sure that the Federal Reserve will raise interest rates next week for the first time in 3 years, right? Because almost no one at the central bank believes that a quarter- point increase will significantly help reduce inflation.
So the decision to raise rates next week would reflect an assessment that current rates were at the wrong level, right? So, in that case, one raise won't be enough, right? So they plan to do it multiple times, right? Raising rates. Let me emphasize this for you. The Fed rarely acts until officials are convinced that one step will not be enough.
If we get a rate hike next week, then there will definitely be another one next week, Richard said, right? Former vice chairman, now at Primeco. So raising rates 7 weeks before the midterm elections is going to make things a little more complicated , right? Determining the course of federal policy will be more difficult, right?
Because President Trump, who chose Fed Chairman Kevin Warsh in part because he expected an easier relationship than with Jerome Powell, has said he expects to see rate cuts under the new chairman, right? The president chose him specifically to lower rates, but in reality, the Federal Reserve does not report to the president.
So the president is trying to influence the Fed, but if he succeeds, people will lose confidence in the market, right? So, that would be terrible, that would be really bad for stocks, right? Since the Fed established the federal funds rate as the primary tool for regulating the cost of borrowing in the 1990s, the US central bank has only raised rates once, on a " once and for all" basis, right?
So, that was in 1997. Um, the likely move next week, assuming it's definitely not a "once and for all" move, right? So, I think the Fed will raise rates more than once this year, but overall it won't have a huge impact on the stock market. Um, that would also smooth things over a bit more and show that there is confidence that the Fed is not asleep at the wheel, right?
Especially the new Fed chairman, who is this guy. Bu you for being with us, and see you next time.
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