A $45 billion asset manager believes that the S&P 500 is heading for new all-time highs if the Fed makes a rate cut next month.
In a new CNBC interview, Ryan Detrick, Carson Group’s chief market strategist, says that when the Fed cuts rates after a lengthy pause, stocks usually print fresh rallies, based on historical precedent.
“We would, absolutely we would [buy on a dip]. I think it’s safe to say the market is saying there’s going to be a cut. So let’s hypothetically say we have a cut in four weeks. I took a look, when you have a long break in between cuts – we’re going to have nine months, obviously, since the last cut assume we get one in a month here – if you go between five months to a full year in between cuts, one year later the S&P’s higher 10 out of 11 times with a 14% median return.
What I’m getting at, this pause we’ve had, what did Tom Petty say? ‘The wait’s the hardest part’? Well, apparently, the wait is going to be worth it, and don’t fight the Fed. It could be another good end-of-year rally here.”
The S&P 500 closed Monday at 6,439, down more than 27 points on the day.
The CME FedWatch Tool, which generates probabilities using the 30-day Fed Funds futures prices, estimates there’s an 83.3% chance the Fed will cut the federal target rate by 25 basis points at the Federal Open Market Committee (FOMC) meeting in September.
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