You know, taking a much closer look at alternative data sources, including wage inflation data. We see aggregate wage growth coming back in line with pre-COVID levels, indicating a softening, especially on the high end.
Jeffrey Rosenberg
This data aligns with market pricing showing a labor market slowdown and about 70% odds of the Fed continuing its rate cutting cycle.
How much is the risk asset market depending on that rate cut?
Host
Jeffrey Rosenberg
It depends on risk segments. Investment grade fixed income returns depend more on rates due to low credit spreads, while high yield and equities are more credit sensitive.
Are you buying after recent tech earnings and momentum unwind?
Host
Jeffrey Rosenberg
Recent equity valuations were euphoric and overextended; the current pullback is possibly a buying opportunity if macro outlook doesn't worsen, but we are watching how this revaluation plays out.
Jeffrey Rosenberg
Regarding fixed income, the sweet spot is in the mid part of the curve (five to seven years), which may benefit from Fed responsiveness and potential tightening normalization shocks.
Jeffrey Rosenberg
The Fed is more likely to respond with cuts if stock market pullbacks impact the economy through consumption and wealth effects.