U.S. Fed will continue to use hawkish language until it cuts rates, CIO says

Just give me a sentiment check on these markets. We have Fed officials issuing some caution here about the prospect of cutting rates too soon and markets seem pretty happy to rally through it. Thank you very much, Dan, for having me on the show. Yes, I I think for the from the Fed point of view, that’s part of the plan. They will continue to be hawkish until they cut and it has been a major change. If you see it from the last year we were expecting like six rate cuts and now we are OK with the three and starting with June. But then Fed has repeatedly said that they will be data dependent and if we look at it from from now till the June, there is going to be 3 CPI prints, three job prints. And the the transition that the Fed wants the inflation to be around 2% will be a bit of a bumpy. So we’ll have to keep in mind what kind of data we see and PC data that we are going to see is going to be an important hog in that wheel. That if we are going let’s say above 2.93% then there is going to be a bit of a concern. But I think I think we are seeing that PC is much softer than the CPI. So let’s see how the, how the data comes up. But we still feel that, yes, there will be some kind of a rate cut and Fed will continue to have the language of a bit hawkish till they actually cut it. Indeed. And look, walk me through the next data point that we were just discussing. The PCE number is going to be very closely watched. Is it going to confirm that rates may need to stay higher for longer. Again that’s where I think I think we have to sort of compare because PCE is the Fed favorite sort of indicator on the inflation. And if if it surprises us to the negative, yes, the Fed will go to it because they would like to have that kind of a legacy that they were able to tame the post COVID inflation. And then they will go go towards being more sort of a data dependent. And we have to see how how the job market and the overall the growth numbers and how much growth can we sacrifice with the kind of the inflation, with the kind of high rates higher for longer trend. But we still feel that we will see some kind of a tackling of the inflation. I think Fed has done a decent job and but the past 2% will not be that easy. Faisal, just before I let you go, waking up this morning looking over what is clearly the world’s best business news website, cnbc.com. No argument there. Excellent article on the question of whether or not we can see markets move higher here. And this piece that asks is it time for investors to hedge a market decline? We’re seeing record highs on Wall Street. Asian markets seem pretty happy to top some recent gains as well. Walk me through what to look out for from here and should we be looking at a potential pullback in the markets given the run up that we’ve seen. I I think now being we are, we are probably entering the another earning cycle. So the corporate earnings will be a very major, major part that we will be looking at because the earnings growth has been good especially led by the tech sector. The cash flow generation has been good. The valuations have been slightly stretched, but they are not sort of totally over from the historical benchmarks. So again the the corporate earnings that are coming up will be a key in order for the market to see where do they go next and it will be the broader corporate earnings because we saw in the last earnings the tech has sort of beaten the estimates around 89% as compared to 77% on the broader market. So that that will be a key area that we need to look at and how how does the currency market move especially the strength of the dollar remains and how does that move is going to be an important?