Stock market analysts trying to predict Wall Street’s next move are debating key cross currents, such as tariffs, interest rates, and consumer confidence.
“We still don’t know what the tariffs are going to be. Are importers going to pay some of it? Nobody knows what’s going to happen,” warned KTRH money man Pat Shinn.
Pat looks skeptically at predictions that the market is poised for a major takeoff once it becomes clearer when the Federal Reserve will reduce interest rates.
Some of those bullish predictions point to low consumer confidence as a positive, with the logic that once confidence improves, the market can pick up dramatically. Jim Paulsen of Paulsen Perspectives says the fact that the market is strong despite tight interest rates indicates underlying strength and a readiness for a jump.
Pat suspects expectations for lower interest rates are built in, especially considering weak jobs and economic numbers last week, and this week too. He predicts smaller and mid sized companies may have room to move up but he warns the biggest names are already trading at extremely expensive multiples with little room left on the upside. “The time to buy would’ve been obviously in April when everybody was scared to death,” he said. “The market was down 20 percent. And folks are thinking ‘the world’s coming to an end.’ Right now, everybody’s feeling pretty good. We are seeing a lot of overoptimism on artificial intelligence and also crypto. That tells me that the market is not ready to take off.”
Photo: AFP