Gundlach on the Fed’s rate hike outlook
Jeffrey Gundlach mentioned that while he predicted that the Fed would go down from two expected hikes in 2019 to 0.5 hikes, the Fed surprised him by projecting no hikes this year. As we highlighted in Gundlach Predicted the Fed’s 2018 Direction Change-What’s Next?, he thought that the Fed might reduce its rate hike expectations for 2019 and increase them for 2020, which implies to the markets (QQQ) that the weakness in the economy is short term.
Gundlach surprised by the Fed’s dovishness
The Fed went one step further and lowered the projected rates for 2020 and 2021. Gundlach said, “what the heck is that ‘1 hike in 2020’ thing about? It seems almost desperate. Fed has gone from ‘we got this’ to ‘we’ll get back to you.’ Not reassuring.”
In December, Gundlach was one of the prominent investors who was very vocal about how the Fed shouldn’t be raising rates when the economy (DIA) isn’t overheating and inflation (TIP) is low. He said that the Fed shouldn’t have kept rates (TLT) so low for this long. Now, that the Fed has pivoted since January and has turned visibly dovish, Gundlach is still concerned.
U-turn caused uncertainty
As reported by Reuters, Gundlach said, “This U-Turn – on nothing fundamentally changing – is unprecedented.” He also said, “Three months ago, we were on ‘autopilot’ with the balance sheet – and now the bond market is priced for a rate cut this year. The reversal in their stance is stunning.”
Gundlach thinks that the Fed’s move will add to uncertainty in the market (SPY). The move will likely hurt the Fed’s credibility.
Conagra Brands (CAG) is among the few packaged food companies for which analysts maintain a favorable outlook.
After opening on a bearish note on Wednesday, Tesla (TSLA) was trading with 4.8% losses for the day, near $195.25 at 1:16 PM ET.
With voting conducted in seven phases panning six weeks, India’s (EPI) elections have been a grand affair—to say the least. Tomorrow is the day of the results.
Qualcomm (QCOM) stock fell more than 10% in the first half of trading on May 22 after it lost its licensing lawsuit with the US FTC (Federal Trade Commission).
Apple (AAPL) suffered a setback recently when the US Supreme Court allowed an antitrust lawsuit against the company to proceed.
Today doesn’t seem to be a good day for electric vehicle companies. Earlier today, NIO stock hit an all-time low of $4.00.
The cannabis sector has been struggling to find direction on May 22, with cannabis stocks trading on a largely mixed note in the first half.