Many investors believe the Federal Reserve will skip raising rates at its next meeting in September. Right now, it’s shaping up to be a “goldilocks” scenario, Great Hill Capital Chairman Thomas Hayes tells Yahoo Finance Live.
“We finally have a goldilocks scenario where the slowing is starting to kick in, the lagged effect is starting to kick in, and more than anything what that means for the Fed is it gives them cover to actually pause in September, which is kind of priced into the markets right now,” Hayes says. Although many investors believe the Fed will hike in November, “we are going to get a lot of inflation data between now and then” and “if those numbers continue to come in a little bit softer, the Fed may be done in terms of hiking, not done with tightening cause they’ll keep rates elevated for a little while,” which “creates this perfect scenario for stocks moving forward,” Hayes explains.
Hayes also notes that with some softness in the labor market, quit rates declining, job openings softening, “that creates an environment where you're not going to have the wage price spiral, where you're not going to see this accelerating wage inflation, and that’s going to give a lot of comfort to the Fed.” Let the Fed “keep rates elevated” and have this “perfect situation where the economy is slowing a little bit, but the Fed is done tightening and then companies can start to perform,” Hayes explains. Hayes says for people expecting the “Magnificent 7,” Alphabet (GOOG, GOOGL), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA), “to have a monster second half like they had the first half, I think they're going to be a little surprised.”
