Big Tech, Inflation & The Fed: What’s Next for Stocks?

Let's go ahead and bring in Paul Stanley.

He is the chief investment officer at Granite Bay Wealth Management here to kick off the broadcast after the closing bell.

Nice to see you here today.

Thanks for having me, JD.

So this is the first day, and it's not, it's not you, it's like a bad luck day, but it's the first day in a while we're looking up that we are not finishing at an all-time high, but for the most part we're still essentially at those very lofty elevated levels.

What have you seen across the tape here on Wall Street the last few weeks?

What do you think all this sets up for the 202, I really think what's going on today is really just about investors reassessing risk.

Nothing's fundamentally changed about the story out there in the market right now.

The AI trade is still strong.

Everything still looks great fundamentally, but eventually people are going to take some money off the table when you've had one of the longest runs in the market that we've had in quite some time.

So when you see a jobs report like we had this morning and people start to get worried about inflation and the rates going back up a little bit, it's normal.

People want to reassess risk a little bit.

Paul, do you think that big tech can continue to do a lot of the heavy lifting continue to carry on this market, or are there other sectors that you think investors may increasingly look towards?

Well, I do think big tech is always going to be a driver of the market.

If tech doesn't perform, the markets are going to have a hard time just because of how heavily weighted they are in all of the indexes.

But ultimately all of this tech investment has to trickle down to some other parts of the economy for it to make sense.

So we're looking for a broadening out of the market.

Maybe some more midcaps and small caps, industrial things to start benefiting from all this investment in AI because if you just invest in AI endlessly and it's just this inner loop of everybody spending on their own AI, it has to do something for other industries eventually.

Or what's the point?

How do you think more broadly investors should be thinking about the question of asset allocation in their own portfolios for the rest of the year?

Well, the biggest thing we always focus on is letting people know don't make a long term decision based on a short term. asset allocation for the rest of the year.

If you have a proper financial plan and you're focused on the rest of your life, I don't think you fundamentally change that based on anything that's going on right now.

If you've got short term money, then it probably isn't money that should have been invested in the market to begin with.

So we try not to tweak asset allocation too much just based on what's going on right in the moment.

I want your take on what you're seeing with inflation.

Obviously this is a way different picture that we are dealing with in the summer of 2022.

Safe to say we're well off those highs thankfully, but you could also argue maybe we're starting to trend in the wrong direction if you look at.

Reading like core PCA, what do you see for inflation?

What do you think the Fed does with what you see in inflation?

It's starting to look more and more likely that there will be at least one interest rate cut you see now in the end of the year.

One interest rate, excuse me, rate hike.

I'm so used to saying cut over the course of the last couple of years that you just say it intuitively, right?

Of course one interest rate hike between now and the end of the year is starting to look more likely, but I truly believe that a lot of the inflationary fears right now are just based on the hikes in oil and what's going on in Iran, and that's going to pass.

We don't know exactly when it's going to pass or how it's going to pass, but no geopolitical event lasts forever.

So there's no reason to believe that this is going to be the first one that does.

And when that all settles down, oil prices should come back into check, and I think that things will settle out a little bit.

Obviously with that ADP jobs print today.

We get the regular jobs print for the month coming up on Friday from the Bureau of Labor Statistics.

That or anything else, any other big catalysts you're paying attention to, you think traders out there might benefit from also focusing on coming up?

I mean, jobs reports are obviously very, very important, right?

It's one of those ironic things that a strong jobs report can make people afraid that the economy is running a little bit too hot and then start to be bad for stocks because interest rates might have to go back up.

So it's a weird thing when you see jobs reports are great and that's a bad thing.

Yeah, I know a lot of people, yeah, we're back in that kind of like good news is maybe bad news, bad news, maybe not so good news.

You and I are looking at December probability for the FOMC, a slight chance that we hold.

So at least maybe we don't get those cuts, but maybe not a raise either.

You know, it would be great if we were to hold for sure.

I know that with a new Fed chair coming in.

Our president has made it very clear that he's not a fan of them raising interest rates ever, so hopefully that political pressure doesn't play into it, but it wouldn't be surprising if it does.

Two weeks from today we get the next FOMC decision.

Paul Stanley, thanks for being here.

Come back soon.

It's nice to see you.

Thanks for having me.