A Conversation with Mark Hamrick
Interest Rate cuts: When the cuts happen next week, what happens next?
The Federal Reserve is widely expected to begin walking down the path of interest rate easing with a reduction in its benchmark federal funds rate of one-quarter of one percent. The announcement and Chairman Powell’s news conference is Sept. 18. At the same time, the Federal Open Market Committee will release its Summary of Economic Projections, including each member’s expectation regarding future rate cuts. In the previous release in June, they collectively saw the benchmark falling about 200 basis points from the current target range of 5.25-5.50%. At that time, we should also have a better idea about where the target sits by the end of the year. The future path is highly dependent on the performance of the U.S. economy.
Stock Market Volatility: Is this the new normal for the next six-nine months as overvalued equities re-adjust?
If anything, investors have been lulled into a state of complacency given the steady and strong gains of the major averages with relatively few recent pullbacks of much magnitude. Such complacency is typically followed at some point by a more significant retrenchment, including a correction or even a bear market. But the timing and duration of these pullbacks are virtually impossible to predict, which is why market timing is a fool’s errand. For long-term investors, including those who need to save for retirement, steady and slow wins the race, meaning to have a consistent and dedicated approach in order to capture the superior return that equities provide.
US Elections: Traditionally, presidential election years are perceived as pivotal moments for the economy. What can we anticipate?
In an election year and cycle that has been unprecedented in many years, suggesting that the future including the outcome should be entirely predictable would be counter intuitive. At the same time, the U.S. economy and financial markets have proven to be more resilient than might have been expected given the frequent and ultimately ill-timed predictions going back about two and a-half years that a recession was imminent in the U.S. The Federal Reserve is seen easing monetary policy over the next couple of years, which itself will provide tailwinds to the U.S. economy. Geopolitical concerns and uncertainties will be with us for the foreseeable future. Investors and consumers will need to continue to abide by best financial practices, including prudent saving for both the short and long-term while paying down debt.
