November 10, 2022
“Thursday’s softer-than-expected inflation number confirms our belief that inflation is yesterday’s story. Inflation is still way above the Fed’s 2% target, and we believe the Fed will keep their word and continue to raise interest rates. We are preparing for an environment where interest rates remain higher for longer. Investors should be more concerned with the effect that rising rates in a decelerating economy have on their portfolio values rather than the current level of inflation. Our message to investors is that a recession is in front of us, and inflation is behind us. Investors should take steps to ensure that their portfolio is positioned for a global recession, as the stock market still isn’t pricing in this global recession risk. We are bullish on areas of the market that are poised to perform well during a global recession, such as the healthcare and staples sectors. The U.S. Dollar continues to be our largest long position. We are bearish on the sectors that we think will do poorly in a global recession, such as tech and discretionary.” – Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management.
1. Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, stated that the softer-than-expected inflation figure confirms his belief that inflation is “yesterday’s story.” He suggests that the Federal Reserve will maintain its strategy of raising interest rates as inflation is still above the target. Landsberg believes that the impact of rising rates on a decelerating economy should be a greater concern for investors rather than the current level of inflation. He advises that portfolios should be positioned for a potential global recession and remains bullish on sectors such as healthcare and staples, which are expected to perform well during a recession while being bearish on sectors like tech and discretionary.
2. Inflation in October has eased more than forecasted, allowing for hopes that the Federal Reserve could slow down the pace of interest rate hikes that have been impacting the economy and stocks. The consumer price index (CPI) rose 0.4% from the previous month, less than the expected increase of 0.6%.
3. Due to the positive news on inflation, U.S. equity markets had their best session since 2020, with significant gains in Dow Jones Industrial Average, S&P 500, and Nasdaq Composite. 4. Economists and market experts have diverse views on the CPI data. Some see it as a sign of moderation, indicating a potential slowdown in the pace of rate hikes, while others remain cautious, suggesting that it’s too early to ascertain a trend from one data point.
Landsberg Bennett is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC (member FINRA and SIPC). Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.
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