Inflation, not geopolitics, will guide Fed decisions: Andrew Ferris

Economic Times

6 hours ago

Andrew Ferris, CEO of Ecognosis Advisory, advises clients to reduce US holdings due to expectations that the Federal Reserve will maintain current interest rates. He anticipates Powell will reinforce this stance at the Jackson Hole meeting. Despite the S&P's record high, it's underperforming European and Asian markets.
Tired of too many ads?
Remove Ads
Tired of too many ads?
Remove Ads
"I am advising my clients not to add to their US holdings; in fact, they should consider progressively reducing them because I do not expect the Fed to cut interest rates anytime soon. I am looking forward to the Jackson Hole meeting , where Powell will likely reiterate his previous stance. For now, inflation remains solid, stable, and slightly rising—these are the actual numbers, not impressions," says Andrew Ferris , CEO, Ecognosis Advisory First, we need to separate two things. What is happening now in the talks between Ukraine, Russia, and the European Union does not have any direct economic effect. In other words, it makes headlines, but I do not consider it a guide to what will happen in the market.Second, while the S&P is at an all-time high, it is underperforming every major European and Asian market in relative terms. The S&P is up only about 1.37% year-to-date. Most indexes in Asia and Europe have outperformed, though not every single one—for example, the Sensex is about 2% up. Obsessing only about European and Asian markets can overlook that they are strong places to invest.I am advising my clients not to add to their US holdings; in fact, they should consider progressively reducing them because I do not expect the Fed to cut interest rates anytime soon. I am looking forward to the Jackson Hole meeting, where Powell will likely reiterate his previous stance. For now, inflation remains solid, stable, and slightly rising—these are the actual numbers, not impressions. While the labor market may not be as strong as expected, the Fed is primarily focused on inflation. Therefore, despite political pressures, they are unlikely to cut interest rates in the near term.Let me reiterate what I said earlier. Forget the Ukraine situation when considering markets—they are two completely separate things. I look at markets based on overall performance. Despite concerns about the S&P, it is underperforming every major market in Europe and Asia.Not really. Considering the overall performance of the Indian economy and a favorable inflation outlook, I do not expect the RBI to cut interest rates anytime soon. However, we can look forward to minor boosts from Diwali-related tax reductions on certain consumer expenditures, particularly small cars and health insurance.These should not be confused with tariffs—they are taxes on local spending, not imports. Regarding small car taxes, I would need to analyze them in more detail to assess the impact of Diwali tax cuts. For now, I do not know the precise effect, but any government tax cuts are generally positive news.