There was confidence from Powell that inflation is making some progress: Gabriela Santos

JP Morgan Asset Management chief market strategist for the Americas Gabriella Santos, you were hunting for clarity from Powell on what the Fed needs to see before delivering its first cut. Did you get that? I think we got it. And I actually think when we look at the dot party or the dot plot that actually, and this is the markets rating, it was a little bit more dovish because first there are no rate hikes. That's great for the market to hear that's not on the table. Powell repeated that as well. And then he very much said it's really one or two cuts, but how is that dovish? It was two to three I but really the market had already gotten to 1:00 to 2:00. So the fact that the the Fed met them there and didn't see the need to be even more hawkish than what investors were thinking, that in and of itself is dovish. And I do think to your point earlier, there was confidence from Powell that inflation is making some progress, that they were right to not freak out in the first quarter when inflation was a bit hotter. And really I think what they need to see is a couple of more inflation data prints that come in a bit soft like today, month over month 0.20.3. That helps to get them feeling a bit more confident that they'll get to 2% during their time horizon. Let's say you're walking down the halls of JP Morgan right after the Fed announcement, which you're not 'cause you're right here on the Fox business set and somebody stops you and says, we know that they paused. We probably think they might loosen maybe November. I don't know if the Fed funds futures are showing, but November looks like that's going to be the one. What do you purchase for a portfolio between now and then? So what's interesting is I think it's really a a matter of when rate cuts happen, not if. And so regardless of the specific timing, that's a direction and investors need to put in those trades and invest before it happens. So what to do? I think on the bond side, a lot of people are sitting in cash and cash rates are great right now, but there is a cycle of cuts coming. So why not start to buy some treasury, some investment grade bonds, some high yield bonds that are a little bit longer in duration, so lock in those yields for longer. What about stocks plus stocks? The This is a great environment for risk for stocks, it's a soft landing. The soft landing continues. That means you can get an earnings recovery. So make sense to have financials up, to have home builders up. We also like industrials. And also in terms of stocks, it's also about the micro, all those tech companies lives that you listed earlier have nothing to do with this back and forth on the timing of rate cuts or what the economy is doing. It's about long term forces around AI and very clearly there's rightfully a lot of enthusiasm about that. Well, yes. And if you look on your screen, everybody, you see Apple up 4 1/2 percent after the big run up yesterday. But do you then, as you say, you want to start to move money before it happens out of conservative treasuries and into to other areas? Do you just go with the big guys who have piles of cash and don't need to borrow money? And that's where it gets a little bit tricky because I think for some of those micro stories in tech, those have already started moving a year and a half ago. And so you have these companies that are now $3 trillion plus you've had a huge rally in the quote UN quote magnificent 7th. So I think now is the time to think very carefully about them. You have one up 150% this year, one down 30. So clearly their individual stories there. And what other beneficiaries are there from AI that are a little bit cheaper, other semiconductor companies, industrials to build those data centers, utilities to power those data centers. So to think a little bit more creatively, given that you've seen quite a run in some of these names. We'll be watching it all. Gabriella, thank you very, very much.