James Bullard, President of the St. Louis Fed, argued during an exclusive interview with FOX Business’ Edward Lawrence on Cavuto: Coast to Coast that the central bank “needs to get inflation under control, and I think we have a good plan Therefore”.
John Koudounis, CEO of Calamos Investments, argued on Sunday that market volatility will last “a long time” but noted that the current situation presents buying opportunities.
“I do not see it [market turbulence] go away,” Koudounis told Fox News Live on Sunday. “It depends on how the Fed tries to land this. It will be very difficult to get a soft landing. It’s never been done.”
“There will be some good times, there will be some bad times,” added the CEO of the global investment firm specializing in investment management. “Our advice to our customers: You have to be there because the upward trend is setting in and you have to be invested.”
Koudounis provided the insight two days after the S&P 500, the US stock market’s broadest measure, slipped into bear market before climbing back above that level.
The benchmark fell more than 20% from its January high of 4,796.56 before erasing losses to close at 3,901.36. An official bear market would require the benchmark to close at or below 3,837.25.
The tech-heavy Nasdaq Composite, which entered a bear market earlier this year and is down 29% year-to-date.
| ticker | security | Last | To change | To change % |
|---|---|---|---|---|
| Me: DJI | DOW JONES AVERAGES | 31261.9 | +8.77 | +0.03% |
| SP500 | S&P500 | 3901.36 | +0.57 | +0.01% |
| I: COMP | NASDAQ COMPOSITE INDEX | 11354.617127 | -33.88 | -0.30% |
Koudounis emphasized that the current situation “absolutely” represents “some value”.
“There was a rotation between growth and value stocks,” he noted. “Now growth stocks have been hit so hard that active managers, the pros, are starting to pick a few and add to those positions. And the companies that are fundamental are struggling, they have cut those positions.”
“So if you’re an active manager, actually see this as an opportunity to get rid of some companies that haven’t done well and add the ones that you think will do well,” Koudounis continued. “So there are opportunities, and over time you will do well if you have a balanced portfolio.”
INFLATION RISES 8.3% IN APRIL AND FLOWS NEAR A 40-YEAR HIGH
Markets have been volatile in recent weeks as concerns about US Federal Reserve rate hikes and high inflation continued to worry investors.
US stocks sold off precipitously on Wednesday as more retailers began to expose the negative impact of inflation, making for the worst day for stocks since 2020.
John Koudounis, CEO of Calamos Investments, discussed the impact of inflation on Americans and noted the volatility in the markets. (iStock / iStock)
The Dow Jones Industrial Average fell over 1,100 points, or 3.6%, on Wednesday.
Earlier this month, news broke that April inflation fell for the first time in months on an annualized basis, but rose more-than-expected as supply chain restrictions, the Russian war in Ukraine and strong consumer demand kept consumer prices elevated.
The Labor Department said earlier this month that the consumer price index, a broad measure of the price of basic necessities including gasoline, groceries and rent, rose 8.3% year on year in April, below the rise of 8 .5% yoy is March. Prices rose 0.3% in the one-month period from March. Those numbers both came in above the 8.1% forecast by Refinitiv economists and the monthly gain of 0.2%.
The Federal Reserve faces the tricky task of cooling demand and prices without inadvertently dragging the economy into recession.
“Inflation is there and it’s very difficult for the Fed to control it,” Koudounis argued, stressing that everyone would be “harmed” by the price hikes.
On Tuesday, Federal Reserve Chairman Jerome Powell reiterated his commitment to curbing the highest inflation in decades, noting that the central bank will raise interest rates as much as needed to tame consumer prices.
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Kenny Polcari and Erin Gibbs share insights into inflation, the economy and the stock market in Making Money.
Fed policymakers raised benchmark interest rates by half a point earlier this month, and Powell has all but promised two similarly large hikes are on the table at upcoming meetings in June and July. He echoed that sentiment on Tuesday as the Fed attempts to catch runaway inflation and bring it back to the 2% target.
Koudounis warned that a recession “will be difficult to avoid”.
“We hope the Fed can avoid that,” he continued, noting that the central bank is expected to hike rates at each upcoming meeting.
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“I’m guessing 50 basis points every time,” Koudounis said. “If they stay the course and stop buying and of course keep increasing [rates] By the end of the year it will be difficult to avoid.”
Koudounis added that he believes inflation will persist and fall short of the Fed’s 2% target by the end of the year.
Megan Henney and Suzanne O’Halloran of FOX Business contributed to this report.