Public Live: The Markets Are At All-Time Highs. What Do Investors Need To Know?

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

The markets are at an all-time high, so what do investors need to know? During a recent Public Live audio show, financial journalist Dion Rabouin caught up with Jason Ware, Chief Investment Officer at Albion Financial, about the current state of the market, the Fed’s response to the pandemic, and economic recovery. Here are some highlights from their discussion.

Dion Rabouin: The S&P is near all-time highs, so we need to buy the all-time high right now?

Jason Ware: Our process is to look at the fundamental backdrop, and things continue to look very good. We have a boom happening in the U.S. economy right now. We are going to get the best GDP growth since 1984 and the best housing appreciation prices since 1988. We have a synchronized global economy underway, consumer spending is strong, and inflation doesn’t appear to be problematic. The Fed is still in the game, [we’re seeing] rising corporate fundamentals, and our counsel is that the bull market continues to do what’s necessary. We will probably have some dips and corrections along the way, but we are confident in the future.

DR: Do we need another catalyst [for markets] to go up? What are your thoughts?

JW: It’s a question about the near-term. Over the short-term, the market doesn’t care about strong fundamentals. The short-term depends on sentiments. It’s hard to predict the madness of crowds. Putting money into the market drives the market in the near-term.

DR: Can you spell out what it means to have an accommodating monetary policy?

JW: We have a Fed that controls interest rates and borrowing costs. Accommodating policy means interest rates are low. It also means bond yields are lower, so stock returns look more attractive by comparison. The Fed is also involved in buying bonds to keep bond yields even lower. Now, the Fed is talking about potentially reducing these bond purchases and raising interest rates to normalize monetary policies. The dot plots are the summary of economic projections. All members give projections regarding when the Fed should raise or lower interest rates. At the last meeting, that consensus moved forward a little bit, meaning the Fed might be raising interest rates sooner than expected. At Albion, we are a bit more hawkish than the markets, but whether we are at zero interest rates or 50 basis points, that is very pro-growth. The Fed has bought bonds before, raised interest rates later, and we’re still at record highs.

DR: Is there an asset class right now that people are too excited about?

JW: We’re seeing that in crypto. I’m not saying you can’t own some of them for the long-term, but right now it’s primarily speculation. A lot of them have been cut in half over the past few months. If you look at the charts, many of them have come out of thin air. How much exuberance is baked in?

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The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.