After the Dow Jones Industrial Average (^DJI) and S&P 500 Average (^GSPC) closed at all-time highs, Unlimited co-founder, CEO and Chief Investment Officer Bob Elliott joins Market Domination’s Josh Lipton and Madison Mills to discuss the day’s market action amid a shifting macro environment.
“Coming out of last week’s Fed meeting, we see an environment in which the Fed is committed to providing significant monetary easing and even easier policy, even as asset prices are nearing peaks and the economy is doing well. This should be positive for growth going forward compared to the recession fears priced into the bond market. As a result, we believe stocks should be favored over bonds in the near term,” Elliott said.
He told Yahoo Finance that the technology sector is priced to perfection, saying, “When you look at what’s priced in the technology sector on the stock market, not only is it perfect, it’s also got some of the most amazing earnings results.”
Elliott explains: “Looking forward, one aspect of easing is that it broadens the equity market as a whole, so sectors of the market that have underperformed relative to large growth companies are likely to benefit somewhat from easing financial conditions. At the same time, the high expectations for large tech stocks, as we know, have always been very hard to meet sustainably, so I think it makes a lot of sense for tech stocks to cool somewhat relative to the rest of the market going forward.”
He said all the signs coming from the Fed suggest that “the Fed would be happy to cut interest rates even if the economy is doing well…If (inflation) is no longer a concern, why keep rates at this level when you can cut rates and avoid even the slightest risk of a recession?”
For more expert insights and the latest market trends, click here to watch this entire episode of Market Domination Overtime.
This post was written by Naomi Buchanan
