Our views on Inflation, Interest Rates, The Fed, Geopolitics, and Indicators to Watch
We were interviewed live on Monday’s Asharq Business اقتصاد الشرق Morning Show with anchors Fahed and Samia Saleh to discuss:
- Why are Asian markets opening down?
- What is causing Michigan consumer sentiment to decline?
- Are we seeing the beginning of a correction in U.S. markets?
- Will U.S. tech decline in the face of China’s renewed AI prowess?
- Will we see a surprise in personal consumption expenditures (PCE) this week, the Federal Reserve’s preferred inflation metric?
Special thanks to producer Tabarek Jouini.
THE INTERVIEW
⚖️I had mentioned on Asharq a few months ago, in December, that we would see a rebalancing in the beginning of 2025, especially after such a huge run up in the Mag 7 and American stocks. I believe we are still in the throes of profit taking and rebalancing along with understanding the impacts of the new Trump administration.
🌏You are seeing a flight to safety based on new and unknown policies decisions domestically as well as concerns over Chinese naval/maritime maneuvers in the waters between Australia and New Zealand and the diversion of passenger flights.
📊Important to acknowledge that economy and stocks don’t always move in the same direction as GDP sand one cannot look at US markets solely in isolation. You are seeing some rotation within the US markets AND you are seeing rotation out of US markets and into gold, bonds, and other developed markets like Europe and Japan, as well as emerging markets.
🌍For Europe, you have to assume that Trump follows through on his rhetoric and that the Russia/Ukraine war will end relatively soon. This will be a huge weight off of Europe’s shoulders. If as part of the piece agreement, trade and finances reopen between Russia and Europe, this could be a boon for Germany, France, and Italy, helping pull the largest European economies out of their lull or near recession state.
🛢️Expect over the next few months that we will see oil rig counts in the US start going up and with that, increased oil flow expectations and a drop in the price of oil which will be beneficial for inflation. Additionally, if there’s a peace agreement with Russia, that could also help stimulate more oil flows globally and thereby help lower inflation because oil is an input for everything.
👩🏽💻As for tech, there is a chance that NVIDIA’s earnings after close on Wednesday will be strong, providing a boost to the tech industry with management guidance indicating that DeepSeek won’t destroy spending on AI infrastructure and datacenters—as an example, Elon Musk’s xAI project used 200,000 Nvidia H100 GPUs—the risk is if Nvidia announces another delay in its highly anticipated Blackwell GPU, which was first announced in March 2024.
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Whoever gets burned by soup, blows on yogurt.
Arab proverb
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-25-47
