The last week of August is known for being a low-volume time for markets. However, investors are facing a number of important decisions this week. Looking back at Federal Reserve Chair Jerome Powell’s speech on Friday, the market action was discussed, as well as some key picks ahead of Nvidia’s earnings on Wednesday.
Callie Cox of Ritholtz Wealth Management provided insights on the recent Fed cuts. She mentioned that there have been 18 Fed cutting cycles since 1970, with 11 categorized as “desperation” cuts and seven as “celebratory” cuts. Cox indicated that currently, we are in the “celebratory” bucket, which is positive news for investors. Despite the slowing job market, it’s evident that we are not in crisis mode yet. This indicates that the Fed is cutting rates on its own terms, giving us time to preserve this expansion. Cox’s data also revealed that the S&P 500 has shown a 7% increase in the 12 months following “desperation” cuts and an 11% rise following “celebratory” cutting cycles.
Kevin Mahn, the president and chief investment officer of Hennion & Walsh Asset Management, highlighted the significance of Nvidia’s earnings announcement. He referred to it as a major market inflection point, particularly for the AI Trade. Mahn expressed considerable optimism, stating that Nvidia has the potential to alter investor perceptions and influence the outlook for AI investing. According to Mahn, Nvidia will confirm their rollout schedule not only for Blackwell Ultra next year but also for Rubin and Rubin Ultra over the following two years. He emphasized Nvidia’s pivotal role in the AI ecosystem.
Delano Saporu of New Street Advisors recommended Walmart (WMT) as a solid defensive pick for investors concerned about seasonal volatility in September. Mahn, on the other hand, suggested that Nvidia’s earnings would provide a boost to the broader tech sector and the AI trade. His picks included Broadcom (AVGO) and ServiceNow (NOW) as “adopters,” along with Digital Realty Trust and Vertiv Holdings as ‘enablers’.
Contrary to expectations, there is no ‘bazooka’ style stimulus in China at the moment, as confirmed by a report from the Financial Times. Dewardric McNeal of Longview Global explained that major private equity firms have halted their investments in China this year. He attributed this to the Chinese Community Party and The People’s Bank of China heavily relying on monetary policy actions and short-term rate adjustments, which have failed to restore confidence among investors and domestic consumers. McNeal added that the much-awaited fiscal stimulus, often referred to as “the bazooka option,” is highly improbable. Chinese Premier Xi Jinping’s philosophy views this as welfarism, and the extensive debt levels in China do not support a massive stimulus approach. McNeal advised against speculation about this kind of stimulus, as it is unlikely to materialize.
The freight and logistics index is regarded as a leading economic indicator, highlighting the importance of monitoring such indices for insights into the global economy. This recap of key money moving discussions on CNBC’s “Worldwide Exchange” sheds light on significant market trends, decisions, and predictions affecting investors worldwide.