US economy will 'keel over' in the next 2 years, strategist warns

[Music] wholesale prices rising in August about in line with expectations that's the final inflation data point as the Federal Reserve gets set to lower interest rates potentially next week the debate on Wall Street continuing ahead of that meeting with strategist mixed on whether or not the FED would move to aggressively or aggressively enough let's take a listen and for everyone who's asking for a 50 basis point cut I think they should really reconsider um the amount of volatility that would cause in short-term funding markets it's just not something the FED wants to risk I think a a 50 basis point cut would wreak of panic and it's like it's almost like you know we're we're totally behind the curve at this point the FED funds Futures are right the chances are is that it's going to be a 25 basis point cut so let's get another voice to weigh in on this debate we want to bring in George CES he's in andelle capital founder and chairman joining us now George it's great to see you so of course this debate has been 25 or 50 whether or not if the FED does go 50 is that going to incite some Panic within the market just about maybe ultimately what that tells us about the state of the economy what do you think hey Shauna well they should go 50 but they're not they'll go 25 because they're very cautious and they're very much incremental in in the way they go they go about things but they're behind the curve at this point the the the economy is slowing dramatically and we need a a significant red cut but it's going to be incremental it's going to be over time and it's going to be 25 bases points at a time so it's going to be slow and steady that's the way the FED does business George what is it more spefic specifically that's worrying you so much is is it some of that softness within the labor market or what other data points are you watching that has you really thinking that the FED should go 50 we've had about a 15-year up surge in the in the stock market in the economy and and the FED had a historically strong rise in interest rates the last two years or so and they've been very slow to unwind that and I think that the economy is going to Keel over at some point in the next two years and I think the fed's going to be too slow in in how they combat it but that's the way they're going to fight it they're going to be very slow because they're very cautious so I think they're behind the curve just like they were behind the curve on inflation and slow to raise rates when inflation Rose so much and now I think they're behind the curve and cutting it back so how do you position for that potential uh not the most optimistic potential reality George I think you go into things that are that are sensitive to interest rates I I think people have been really negative on Banks and financial companies the last several days in the markets and I think they're going to really benefit dramatically when the FED starts cutting dramatically with which they'll have to do over the last over the next 6 to 18 months so I I would go into Financial stocks and and intensitive stocks and and things of of that sort I I would I would be hesitant to uh go into stocks that are really dependent on significant growth in the economy and all that because I think the economy is going to slow dramatically so I I would go into interest sensitive stocks uh currently okay well you know I got to ask George uh then what you think about the tech trade yeah I think the tech trade is is long in the tooth I think I think it's been going on a long time and I think that people are you saw the violent move to the upside in Nvidia yesterday uh after quite a bit of correction over the last week or two and I I think that people are fighting the trend and the trend I think in Tech is down I think Tech has had a long move and I think it's not quite uh over yet but I think it's pretty much over and I would be really really cautious on Tech at this point George when it comes to uh earnings have been stabled they've been holding up very very well when you take a look at the estimates here for the current quarter we have seen a bit bit of a revision here to the downside does that worry you at all or does that support maybe the point that you were just making just in terms of that rotation out of tech and seeing opportunity elsewhere yeah I'm not too worried about it I think the Market's going to chop I don't think I don't see any falling off the cliff or anything like that but I think that it's going to get a lot harder going forward in the market I think that the we've been spoiled by uh over 10% returns for quite a long time and I think that's over I think making over 10% is going to be really difficult and you've got to be very sector specific in terms of trying to capture those kind of returns and I think we've got to get used to lower returns subpar 10% you know positive returns but I think it gets harder from here on out for the next five years