Today's Guest: Jim Tassoni, Armor Wealth
Benzinga's PreMarket Prep is the #1 go-to source for everything you need to know before the market opens! Join our expert hosts as they break down the latest market trends, analyze key indicators, and provide actionable insights to help you navigate the trading day ahead.
Benzinga's PreMarket Prep is the #1 go-to source for everything you need to know before the market opens! Join our expert hosts as they break down the latest market trends, analyze key indicators, and provide actionable insights to help you navigate the trading day ahead.
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00:00Getting back now to those rate cuts,
00:03I found this slide from Charlie Bielo's,
00:06a great follow-on.
00:10He put this together.
00:12I thought this was really interesting
00:14because a lot of people were saying,
00:15oh, we're gonna get 50.
00:16And I know with some of the latest news,
00:19we're at about an 85% probability of 25
00:23and only 15 of 50,
00:25but that looks to be actually a good thing.
00:28And he put these stats together
00:30and I found this really interesting.
00:32The first Fed rate cut after a hiking cycle,
00:36when we've gone 25 and when we've gone 50
00:40and the S&P forward returns going out one year,
00:44two years, three years, four years beyond that.
00:47And you can see that the couple of times
00:49that we had our first cut be 50 basis points
00:54was 01 and 07.
00:57And we see the subsequent returns
00:59over the next couple of years
01:00and they were not favorable.
01:03So we actually probably should be hoping
01:06and look to be getting that 25 basis point cut
01:09because that's actually much more favorable
01:11for the market going.
01:13And this is such a good point
01:14because the 50s are normally used
01:18for when the economy is really in a lot of trouble.
01:212001, the tech bubble burst.
01:242007, the financial crisis.
01:27They usually only use 50s
01:30when we're in a whole lot of trouble.
01:32So where markets are near all time highs,
01:35why the hell do we need a 50?
01:37And to that point, Dennis,
01:39that's what I was saying on that previous slide.
01:41What is the market going to be telling us
01:44for us to need 250 basis points worth of cuts
01:47in the next 12 months?
01:49To me, that signals a market in an economy
01:52that's not on strong footing.
01:55If we see that level of cutting over the next 12 months,
01:59I feel that that signals a weakening economy
02:03and not something we want to see for the stock market
02:05over the next 18 to 24 months.