The Fed has 'unleashed a significant tailwind' creating a risk of higher inflation: Torsten Slok
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Federal Reserve officials are holding interest rates higher for yet another month as Fed Chair Jerome Powell is prioritizing easing inflation data over possible rate cuts. Apollo Global Management Chief Economist Torsten Sløk — who was one of the earliest on Wall Street to believe the Fed wasn't going to cut rates at all this year — joins Market Domination to discuss what the Fed's latest monetary policy is signaling about the rate environment.
"I don't think this was their intention, I think that they just looked very innocently at the dual mandate that they had been given by Congress — inflation should be 2%, we should have full employment — and they said... maybe we don't need to have interest rates so high anymore," Sløk says about the Fed's messaging.
"What they didn't recognize, and maybe only realized later, was that when you, after several years of having said interest rates are going up, up, up, you did not have many IPOs, you did not have much M&A activity.;; So as a result of that, that has now been unleashed and that is, as we speak, creating much more activity in capital markets, much more consumer spending... because we now have a significant tailwind because of that signal change."
Sløk goes on to estimate the chances of a rate cut to occur this year and how these economic uncertainties are manifesting in equity markets (^DJI, ^IXIC, ^GSPC), even small-cap stocks in the Russell 2000 (^RUT).
Disclosure: Apollo Global Management is the parent company of Yahoo and Yahoo Finance.
#youtube #Fed #stocks
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"I don't think this was their intention, I think that they just looked very innocently at the dual mandate that they had been given by Congress — inflation should be 2%, we should have full employment — and they said... maybe we don't need to have interest rates so high anymore," Sløk says about the Fed's messaging.
"What they didn't recognize, and maybe only realized later, was that when you, after several years of having said interest rates are going up, up, up, you did not have many IPOs, you did not have much M&A activity.;; So as a result of that, that has now been unleashed and that is, as we speak, creating much more activity in capital markets, much more consumer spending... because we now have a significant tailwind because of that signal change."
Sløk goes on to estimate the chances of a rate cut to occur this year and how these economic uncertainties are manifesting in equity markets (^DJI, ^IXIC, ^GSPC), even small-cap stocks in the Russell 2000 (^RUT).
Disclosure: Apollo Global Management is the parent company of Yahoo and Yahoo Finance.
#youtube #Fed #stocks
About Yahoo Finance:
Yahoo Finance provides free stock ticker data, up-to-date news, portfolio management resources, comprehensive market data, advanced tools, and more information to help you manage your financial life.
- Get the latest news and data at finance.yahoo.com
- Download the Yahoo Finance app on Apple (https://apple.co/3Rten0R) or Android (https://bit.ly/3t8UnXO)
- Follow Yahoo Finance on social:
X: http://twitter.com/YahooFinance
Instagram: https://www.instagram.com/yahoofinance/?hl=en
TikTok: https://www.tiktok.com/@yahoofinance?lang=en
Facebook: https://www.facebook.com/yahoofinance/
LinkedIn: https://www.linkedin.com/company/yahoo-finance
