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Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailTruist's Lerner: General election will cause risk for stocks but other factors matter moreKeith Lerner, Truist co-CIO and chief market strategist, joins 'Squawk on the Street' to discuss if the presidential election will create risk for equities, which president would be better for the stock market, and more.
Persons: Truist's Lerner, Keith Lerner, Truist
Since March, Rosenberg has warned that by trying to crush inflation, the Fed would inadvertently kill the economy as well. "I think that the odds now are that it's going to be more severe than people think because the Fed has gone way overboard," Rosenberg said of a recession. The contrarian view: With inflation falling, a recession is no guaranteeHowever, not every strategist thinks that a recession is a sure thing. But what I think we can see is the Federal Reserve is overdoing it and eventually, the Fed will have to cut rates." Fittingly, Parker's bets are contingent on his view that the US economy won't suffer from a severe recession.
The S&P 500 tumbled 19.4% in 2022, as the Federal Reserve's aggressive rate hikes designed to tamp down 40-year high inflation punished asset prices. The market's 2022 slide cut the ratio of price to forward earnings estimates to around 17 from about 21.7 a year ago, according to Refinitiv Datastream. S&P 500 forward price-to-earnings ratio over timeValuations may still be too high if a recession comes to pass, as many on Wall Street expect. Combined with an expectation of weakening earnings estimates, that would lower the S&P 500 to 3,200, UBS said, roughly 16% below current levels. The 2022 surge in interest rates also could undermine stock valuations by making relatively safe assets like U.S. Treasuries more attractive alternatives.
Stocks were battered in the past week, as investors reacted to a hawkish message from the Federal Reserve. In the past week, stocks rallied Tuesday after the consumer price index showed a smaller-than-expected increase of 7.1% for November. "There's a lot of housing data next week," said Art Hogan, chief market strategist at B. Riley Financial. Ned Davis Research pointed out in a note this week that there has been a recent negative correlation between stocks and bonds, meaning stocks are falling and so are yields. Ned Davis expects the negative correlation to continue for the foreseeable future, and is watching the rolling one-year correlation between the S & P 500 and the 10-year Treasury yield.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThe short-term rally has longer to go, but more challenges to come mid-term, says Truist's LernerSoFi's Liz Young, NewEdge Wealth’s Cameron Lawson and Truist’s Keith Lerner join 'Closing Bell: Overtime' to discuss market rallies, inflation and the Fed.
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