00:00 Julie
Well, stocks are poised to open higher as the August CPI report seemingly cementing investor expectations the Fed will cut rates next week. My next guest though warns not to mistake this market momentum for actual optimism. I want to bring in Alex Morris, FM Investments CEO and CIO. Hey Alex, it's good to see you.
00:20 Alex Morris
Julie, it's good to be back.
00:22 Julie
So this is something I talked a little bit about with uh Tom Sonov of Tasty trade yesterday. He pointed he he's concerned about froth in the market and he pointed out that, you know, it's sort of a buying begets buying sort of situation or to put it another way, momentum. But why do you think it is not supported by actual optimism? How do you tell the difference?
00:43 Alex Morris
Well, I think the real optimism would be we see a lot of better things happening, right? We're looking at rate cuts because we see not that we've declared mission accomplish on a soft landing, but rather because the jobs market is starting to waver. right? We we do see a lot of signs of hitting a top in many ways, but there's just so much money that has been sitting on the sidelines that it has to go somewhere and traditional says when rates start to come down, equities should go up. So, we're seeing a lot of classical uh market trends happening, but none of them seem to be really buoed by a great shared sense of morale across the country or the world or all of these other metrics that are just really hitting new highs, other than the equity market, which again seems to be the byproduct of this result, not the thing driving it forward.
1:23 Julie
I mean, Alex, I could play Devil's advocate and say, who cares? Does it matter, right? In other words, this is you could argue this has been the case for a little while. How long can something like this continue?
1:33 Alex Morris
Well, and you're absolutely right. Um, you know, the quote we've been using is the Big Lebowski that that's just like your opinion, man. And that seems to be right is we could be right about all of these things and the underlying causes for them, but sitting on the sidelines entirely has been a bad trade. Now, that said, sitting on the sidelines has earned a pretty good cash rate. So, you know, sitting this out has been a lot less painful than perhaps five or six years ago where you earned actually nothing or maybe lost a lot of ground as inflation picked up. But you're absolutely right. Whatever the underlying metrics may or may not be, the rally has been sustained and it does seem like for at least the next little while, we will get a 25 basis point rate cut. It feels like in a week that it's still good to be in the trade. The question though is when is it time to start to ease back or pull out? When can you no longer participate and not feel so badly about it and we think that that moment is now and starting to come will become more important in the coming weeks.
