This or That: How the Fed’s rate cuts are shaking up markets

Investment strategist Sam Stovall offers his take on the Fed and the market in a game of "This or That."

Transcript

00:00Rate cut, too late or just in time?

00:03I think just in time. We're going to get two more by the end of the year.

00:07So two more cuts this year, one next year, according to the Fed.

00:10You buy that forecast, yes or no?

00:12I'll say no. I think the Fed might end up being induced to cut by two times next year.

00:19Fed policy, too aggressive or too cautious?

00:23I think it has been too cautious.

00:26Bigger risk, inflation or jobs?

00:28The Fed sees the bigger risk of being jobs because consumers represent two-thirds of consumption.

00:37And as a result, should they end up pulling back, then that could throw us into recession.

00:42Tariff impact on prices, temporary or lasting?

00:46Temporary because they tend to impact prices at one point in time.

00:53A recession on the horizon or too far out to sea?

00:55Too far out to sea. Typically, the NBER takes about seven months to tell us that we are in recession.

01:06So it's usually the stock market itself that lets us know that trouble is ahead.

01:11Investor optimism, too high or spot on?

01:14I think investor optimism has been high and does need to experience a short-term digestion of gains.

01:22But I think that as we head toward the end of the year, that optimism will reemerge.

01:29Okay. S&P 500 into year end. Rally or pullback?

01:34Rally. I think that the final two months of the year traditionally are strong for the market.

01:40And October is typically the most volatile month with 33% more volatility than the average for the other 11 months of the year.