Slower but higher rates and no turning point this side of Christmas. That was Fed Chair Jerome Powell’s message after the Fed’s fourth consecutive jumbo hike. Troubled investors appear poised to continue selling stocks on Thursday as yields rise.
Not everyone agrees with Powell. “The Fed is making a big policy mistake and it will manage to break something. The rate hikes are sufficient. More is wrong,” says the president of macroeconomic research firm Lamoureux & Co., Yves Lamoureux.
The meteorologist also supplies ours call of the daywhich will have bulls cheering as he sees medium- to long-term years for stocks, even as Powell threw a “short-term wrench in the engine.”
This column last spoke to Lamoureux in March, when he declared the end of a trilogy of rolling bear markets that he had accurately predicted as the 2020 pandemic lows began. In March, he predicted a new bull market that would extend into 2025, but now sees it into 2026 due to the “damage” done.
And while bull market conditions don’t seem great right now, “they will when we’re going up and stocks are on the upside,” he said in a recent interview with MarketWatch.
“People are so extremely negative that I have even more confidence than ever, you know, that I’m on the right side of things,” Lamoureux told MarketWatch. Also in March, he predicted that the 10-year Treasury yield would exceed 4%. The move came earlier than predicted and he sees this cycle over and lower interest rates ahead, supporting equities.
To be clear, Lamoureux holds individual names, not indexes, and says May or June marked the bottom for many stocks that didn’t make new lows, like the Nasdaq Composite COMP, -7.45% or the S&P 500 SPX , -2.50%. For example, he bought stock trading app Robinhood HOOD, -4.36% in June, and notes that it has since recovered about 50% from those lows.
He’s also owned Netflix NFLX, -4.80%, and Roblox RBLX, -3.25% at times, noting that these stocks also bounced off early-summer lows.
“People made the mistake of looking at the index, which is four or five big large caps, namely Microsoft, Facebook, and these things are trapped. And they look at the Nasdaq and they think oh we hit a new low. I look at individual stocks because I own them,” he said.
He says investors should stay away from the “famous large-caps” that everyone wants to own. He prefers names that are leaders in their own segment and have some value, like Netflix, which he bought for about three times the retail price.
The problem investors face now is that “they don’t have the reflex to sell,” the forecaster said. That’s critical going forward, because if investors see a bull market until around 2025, that could be a “very important top that won’t be breached for 10 years after that,” he said.
“So unless you’ve learned how to sell, the market will probably go sideways for 10 years,” and that type of market is difficult for those who are used to buying and holding, he said.
As for the ride up, Lamoureux says it’s going to be “straight ahead, faster than we’ve ever seen,” in part because there’s a lot of money on the sidelines. “I think it’s going to make people turn their heads and say, ‘Oh my god, why am I not at the market?’
As for his stock picks, Lamoureux remains a fan of Robinhood and an earlier mention, Bakkt Holdings BKKT, -7.83%, which is slowly “building a massive crypto infrastructure for companies like Visa, Matercard, Global Payments, Fiserv, etc.” .
Lamoureux has two final points to make. The first is that it is now turning bearish against the US dollar after having been bullish since 2014. This dollar weakness, which will be good for stocks and cryptos, is due to the fact that the US produces its own oil and does not require outflows of dollars to pay for this commodity.
Lamoureux & Co.
And a weaker dollar will potentially propel gold into 2028 and to $4,000 levels, also on geopolitical tensions, he said. “I think we’re going to see some rough waters around 2026, 2027 and I think gold will still be able to go up because people are really going to see it as a safe haven,” he said.
Read: What’s next for markets after the Fed’s fourth straight Jumbo rate hike?
The markets
market observation
Losses for stock futures YM00, -0.58% ES00, -0.80% NQ00, -1.03% deepen, with the two-year Treasury yield TMUBMUSD02Y, 4.720% standing at its highest since 2007, along with the Dollar DXY, +1.38%. Oil prices CL.1, -1.27% BRN00, -1.04% and Gold GC00, -1.59% are under pressure. Hong Kong’s Hang Sang HSI, -3.08%, fell 3%, leading to losses across Asia.
After the Fed, Norway’s central bank hiked rates by less than an expected 25 basis points, while the Bank of England hiked rates 75 basis points to 3%, the biggest move in three decades. The pound has eased somewhat in this regard, but is still down around 1.3%.
The Buzz
Better-than-expected QSR, -1.42% results from Burger King’s parent Restaurant Brands lifted shares, while Moderna MRNA, -3.88%, fell 12% after earnings came in well behind forecasts, and Peloton PTON, -3.47%, is close to 20% on a weak holiday forecast.
After the close, we will hear of Coinbase COIN, -4.08%, Starbucks SBUX, -2.89%, PayPal PYPL, -4.40% and DoorDash DASH, +0.04%, among many others.
Among those reporting late Wednesday is Qualcomm QCOM, -4.12%, down over 7% in the premarket after a poor outlook that included a chip glut. Roku ROKU, -4.35% is down 20% after streaming service’s upbeat results but disappointing holiday outlook and ad budget concerns. Ebay EBAY, -4.40% and Etsy ETSY, -4.25% are up after their respective results, along with WWE WWE, -1.49% and Zillow Z, -4.78%.
Morgan Stanley MS, +0.78% is reportedly bracing for global layoffs as business deals slow. And Elon Musk is expected to lay off half of Twitter’s workforce, possibly by Friday.
A day before the payrolls data, weekly jobless claims are due at 8:30 am, along with the trade deficit, third-quarter productivity and unit labor costs. The Institute for Supply Management’s service index and factory orders are both due at 10 a.m
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The tickers
These were the most searched tickers on MarketWatch as of 6:00 a.m. EST:
ticker | security name |
TSLA, -5.64% | Tesla |
GME, -6.23% | GameStop |
AMC, -5.53% | AMC Entertainment Holdings |
AAPL, -3.73% | Apple |
AMZN, -4.82% | Amazon.com |
MULN, -9.62% | Mullen Automotive |
NO, -2.27% | NEVER |
BBBY, -8.39% | bed bath beyond |
META, -4.89% | meta platforms |
DWAC, -2.70% | Capturing the digital world |
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