The March Fed minutes showing officials still think a rate cut is possible in 2026.
The Fed board expects one cut this year if inflation declines in line with their expectations.
Officials also think additional cuts could be needed if the job market softens while oil prices remain high and squeeze household finances while in New York morning trade.
We are looking at the major US stock average. a flat to lower and this does come after the massive rally yesterday.
Now volatility from the US Iran war could return if the ceasefire is broken, but key data releases like tomorrow's March CPI as well as the beginning of earnings season are now shifting into the into the spotlight.
Well joining me this morning to break all of this sound is David Busch, Co-Chief Investment Officer for Trajan Wealth.
David, good morning.
Thank you so much for joining us while we continue to monitor the situation in the Middle East, but at the March meeting, officials are still expected to cut rates once this year.
So what is your reaction to the FOMC meeting minutes and how do you expect that to shift as we head into the rest of this year.
Well, first of all, thank you for having me today, Remy.
It's good to see you again.
Yeah, so, the Fed meeting minutes were sort of a mixed bag.
On one hand, they talked about, you know, the, the inflation that's caused from tariffs, oil, but also with an eye towards the softening labor market.
So they're, they're in a bit of a standstill at this point because we're still seeing persistent inflation, but we have seen some cracks in the labor markets.
Specifically today, we had core PCE that was released and year over year number came down slightly, but the month over month trend line is the same.
And then if we switch over to the labor markets, initial jobless claims increased, but continuing claims decreased.
So right now the, the Fed is sort of stuck in a wait and see approach in terms of what to do next for rate cuts.
Yes, and as we count down to the CPI figures coming out tomorrow morning at 8:30 a.m.
Eastern time, we have to keep in mind that this is the first reading since oil's double digit surge.
So what impact are you watching for here?
And we do also have to keep in mind that WTI and Brent are yet once again inching closer to that $100 a barrel level.
Yeah, so the, the, the whisper, if you will, on the street is, is that CPI may come in, uh, 1% point higher due to the oil price shock from the war in Iran, and it'll be interesting to see how that inflation permeates the economy, because the US economy is currently roughly 70% consumers drive US economic growth.
And with inflation numbers high, interest rates high, prices still high, it's, it'll be interesting to see if that consumer demand continues to slow, but we, we will see this permeating the economy, these higher oil prices, because it, it, it's a, it goes into everything.
The price of oil is, is embedded within goods.
I mean, yeah, with goods and materials and, and it's, it's just all across our economy.
So there is going to be this, this sticker shock tomorrow.
And finally, I do want to get your take on what we're seeing in tech, in particular Mag 7.
So meta spiked 6% yesterday in New York morning trade.
We are looking at meta shares higher as well on the heels of the latest announcements.
Shas up about 2%.
And at the same time, Tesla reversed lower and is down close to 8% in the last five days.
So what is your outlook for some of these Mag 7 names, especially given the fact that they're lower year to date?
Yeah, I, I'm, I'm a firm believer that large cap tech is going to continue to be the wave of the future.
And when we think about those companies that have a competitive advantage within their space, it's hard to disrupt somebody like Ameta or even a Tesla.
But what we're, what we're seeing is kind of that bifurcation between the AI boom that has happened over the last year or so.
With those large language models.
Meanwhile, some of the other tech names have sort of fallen by the wayside.
Tesla specifically, I think really their price action has to do with the number of cars delivered, and so there hasn't been as much demand for electric vehicles.
Having said that, when we look at tech, I also look to that next layer of what companies and sectors of the economy are going to be instrumental in building out the AI infrastructure.
And that's going to be sort of the traditional bellwethers, the, the values, uh, the value stocks of materials, industrials, utilities, and energy stocks.
And, and so it's, it's really thinking about both the large language models as well as that next layer down.
Well, David, we will have to leave it there for today, but always great talking to you.
Thank you so much for joining us and thank you so much for sharing your insights.
Thank you, Remy.
