Pro Perspectives 7/19/23





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July 19, 2023

The interest rate market is fully pricing in another quarter point rate hike by the Fed next week, and then done.
And by the middle of next year, market participants are largely looking for rate CUTS.
But what would induce rate cuts by next year?
It would have to be sluggish economic growth, if not negative growth. 
What would cause that, to the extent that the market would position with such consensus for rate cuts?  
This is a bet that the Fed went too far, too fast, in "normalizing" policy.  And it's a bet that the lag effects of tightening will ultimately strangle the economy.
Keep in mind, the media reports from late last year said "most economists" saw recession coming early this year.  They've been wrong.  The economy has grown at a better than 2% rate.
Moreover, we now have a significant growth catalyst to consider, in generative AI.
Remember, on May 24th, not only did Nvidia have blow-out earnings and incredible growth forecasts, the Founder/CEO (Jensen Huang) of the leading provider of technology that powers AI, proclaimed "the beginning of a major technology era."
PS:  I'd like to invite you to join my new subscription service, the AI-Innovation Portfolio.  We've added four exciting stocks that will play key roles in the technological transformation of the world's data centers. Join here, and I’ll send you all of the details.