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Liz Ann Sonders: There's No Such Thing As A Typical Interest Rate Cutting Cycle

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Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, returns to Forward Guidance to share her investment outlook on U.S. equities. Sonders notes that a handful of large cap stocks have been leading the S&P 500 index higher, while the majority of stocks have been underperforming the index. While this so-called "breadth weakness" occurred at or near stock market peaks of 1999 and 2000, Sonders notes that breadth is strengthening. The phrase "Magnificent 7" is near-meaningless since, as of mid-March, the Mag7 includes both the best performing stock in the S&P 500 (Nvidia) and the worst performing stock (Tesla). Sonders argues that there is no such thing as a "typical" Fed interest rate cutting cycle, and that slower cutting cycles have tended to coincide alongside more bullish stock market action than fast cutting cycles. Filmed on March 4, 2024.

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Use code FG10 to get 10% off Blockworks’ Digital Asset Summit in March: https://blockworks.co/event/digital-asset-summit-2024-londonTimestamps:

(00:00) Introduction

(00:24) The Rally In S&P 500 Has Been Ferocious, The Rally In Average Stocks Has Not

(04:22) Large Cap Stocks Are Leading The S&P 500 Higher... Smaller Names Have Performed Less Well

(09:31) Earnings Growth Is Very Strong (Unlike In 2000)

(12:16) Companies' Earnings Guidance Is Less Specific Than Pre-2020

(16:47) Economic Outlook In U.S.: Rolling Re-acceleration

(20:13) Labor Market Situation Has Been "Mirror Image" Of What Normally Happens

(22:05) This Economic Cycle Has Been An "Orange" Compared To History's "Apples"

(22:29) VanEck Ad

(24:53) There Is No Such Thing As A "Typical" Fed Rate Cutting Cycle

(30:57) Slower Cutting Cycles Have Been Somewhat More Bullish Than Rapid Cutting Cycles

(36:27) Artificial Intelligence (AI)

(43:17) Quality As A Factor

(45:39) Momentum Has Been "Best Performing Factor Year-To-Date"

(49:37) Size and Value As Factors


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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.


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