Michele Martin Featured on Yahoo Finance

Michelle Martin:

I would absolutely agree that we're looking at the inflation in the rear view mirror and so I look forward to thanks of all, first of all for having me today. I really appreciate being here, especially when we're in such a scenario of some positive news. What we're seeing is that inflation is paused and that the Fed at worst will stay steady for a little bit longer. But we're definitely seeing signs that there will be rate cuts going into 2024, which is great news.

Speaker 3:

And Michelle, when do you think, obviously there's debate about this among a lot of smart people. When you look ahead now, when do you think they cut Michelle and how deeply do you think they cut?

Michelle Martin:

Well, there's talk of a cut in March, but the Fed is pausing on that. I believe that they will hold steady, that the Fed will hold steady for a bit of time just to make sure that inflation is in the rear view mirror and the Fed is signaling three rate cuts. I would tend to stick with what the Fed says. There's a saying out there, don't fight the Fed. I think there's a lot of talk right now in the market that there could be more rate cuts, but there's a lot of optimism and I would be of the mindset that it's fairly steady with Andy next year at around 4% we're at on the 10 year, we're just close to four. And if we see maybe three cuts seeing it go down, but I'm not sure I would expect six cuts next year.

Speaker 1:

Well, and the flip side of that, if there are six cuts that could be in response to some deteriorating economic data and that might mean recession. And so I guess what I want to ask you is what are your recession expectations for 2024? Lots of people expected it coming into the present year and it didn't pan out

Michelle Martin:

Well from a recession standpoint. I think higher interest rates do put stress on consumers. They also make business owners think about decisions in terms of purchasing equipment, expanding, hiring new employees. So it is very possible and I think we can expect to see a bit of a slowdown due to higher interest rates. The question is, is it enough that it's called a recession or do we just go to a very low growth rate going into 2024? I think if we see a true recession, which is relatively unlikely, it'll be very mild. But I think that what I'm hearing anecdotally from clients and business owners is that they are being very cautious going into the new year and higher interest rates basically forced us to make choices that perhaps we didn't have to make when interest rates were so much lower.

Speaker 3:

And Michelle, given your outlook for the economy in 2024, so you see a slowing economy, maybe even a mile downturn, what does that mean, Michelle, for your outlook on corporate earnings next year?

Michelle Martin:

I think that we're watching that as it relates to corporate earnings. I think companies are being really cautious. We're seeing that there are cuts going on across different sectors. I think corporate earnings are going to be relatively stable. I don't see that it's going to be a blowout year, but I think it's going to be very normalized. I think it's watching fundamentals and understanding that there are, Nike just announced some major cuts that will happen in the second half of the year. So I think what we're going to see is nothing blowout in terms of corporate earnings, but definitely companies watching the bottom line and anticipating making change changes as needed.

Speaker 1:

Michelle, we got to talk about AI because artificial intelligence has been one of the huge themes of this year and Bitcoin arrived back on the scene recently as it hovers around 45,000. What's your view heading into the new year? We got some exciting new asset classes, but in general, what are you expecting for stocks?

Michelle Martin:

For stocks going forward into 2024? We're coming off of a pretty rough year, more than a pretty rough year in 2022. We've seen a very nice rally throughout the year with just a touch of volatility. I would expect that we're looking at a more normalized return in the markets, not an s and p in the 20% range, but much more normalized, high single digits, low double digits kind of business as usual. When we are looking at what's happening with interest rates, it's also giving individuals an opportunity to move to the fixed income market and get pretty stable returns. So I think that will also have an effect overall on the market, which is people don't need to rely on equities to get that return when you've got bonds that are returning five to 6%. So it'll be more of an equalization and a balance for individuals that are long-term investors.

Speaker 3:

And Michelle, last question here. So you do see opportunity in the fixed income market, where exactly Michelle, is it treasuries, corporates, munis?

Michelle Martin:

It's really across the board. I think that extending duration is really critical right now. So the municipal bond market, there are opportunities there that we haven't seen in literally a decade. And same thing ultimately with corporates. I think one of the things we have to be thoughtful about when we've been working with clients in our portfolios over the last couple of years, we've really leaned into corporate bonds and we've also leaned into some high yield and have a bit of credit risk that if we start to see a slowdown, we'll need to make a shift on that. And that would spell well for just really riding the curve a little bit more and making sure that we're more at an intermediate duration and locking in some of these longer term rates.

Speaker 3:

Alright, Michelle, we're going to leave it there. Thank you so much for joining us today for that investment advice And happy holidays.

Michelle Martin:

Happy holidays to you.

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