Is the record setting rally now in serious jeopardy as rate cuts get pushed further and further out with some now wondering if we’ll get any at all? Let’s ask Josh Brown. He’s the Co founder and CEO of Ritholtz Wealth Management and a CNBC contributor. He’s with me, as you can see at post nine. It’s good to see you, Rick reader, BlackRock tweeting earlier. This was definitely a set back. That’s the word he used. Does it change your view on the market? Does it change the game for the Bulls? I’m not one of these. I told you so people, but I told you we were going to play this game. Cut off, cut on. Today is a decidedly cut off day. It’s exactly what you would expect to see. If you think that we’re set back from three down to two from June down to July, that’s exactly what’s playing out on your screen. This is what I would tell you. You got small caps being hurt the worst. Again, textbook for a cut off day. The IWM is down 3%. The S&P is down. One value underperforming growth. By the way, one of the only green stocks on my screen right now. NVIDIA, not a value stock, I don’t know if you knew that, but the value stocks are taking it on the chin. And then you think about why it’s very obvious we’ve had this huge rally in industrial companies in financials. That’s what tends to dominate the value indices on the small cap side. Consider 40% of debt held by Russell companies is floating rate versus just 21% for the S&P. So everything that’s happening on your screen right now is exactly what you would have predicted if I would have given you this inflation print yesterday. Why is that relevant to tomorrow? Here’s why none of these weight panics have been a lasting hurdle for the S&P 500. We tend to process these things over 48 to 36 hours and we will be back to the original game we were playing. And I think what you’re seeing today is counter trend. The number one debate now, as silly as it sounds, is June versus July. The number two debate is 2 versus 3 in 2024. So let’s say they go in July and they can’t go in June. When’s the next opportunity? They’re not going to go in September to political can’t do it in final election. So you get July, December. Those are your two cuts for 24. If that’s a reason to not buy any of the stocks that you want to buy, I can’t figure out that connection. So I think for the allocator that’s watching this action, I think you’re looking at an opportunity to get long not to panic because you’re getting slightly less relief on the interest rate side. So you then don’t think that today marks some kind of game changer for a rally that started at the end of October, has set new records and even though we’ve had to rethink the direction of the Fed along the way, the greater trend is still up. It look, it’s a game changer if you’re one of these people who piled into semis in the last two weeks, forgetting that they’re cyclical. It’s certainly every single component of the SMH is down today except NVIDIA. So yes, if you chase the momentum trade because you thought rate hikes were going to continue to fuel it, maybe it’s a game changer for you. I think most people have not been playing that game. I think for most people they’re in a good position. They’re looking at the rest of their portfolio. Some of it’s very rate sensitive, some of it isn’t and they’re just fine on a day like today. And I don’t think materially anyone would really say like, Oh, my whole investing outlook for the next year is now changed.
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