The Federal Reserve is set to cut interest rates twice in 2024 as insights show the economy is gradually slowing, but positive investors should be careful as incredibly high inventory costs are likely to suffer a sharp correction, according to JPMorgan Asset Management’s David Kelly.
The world’s leading strategist predicted that central bankers would start cutting interest rates at the September policy meeting, with a further cut likely in December.
This is imaginable thanks to the slowdown in the economy, he added, pointing to the latest employment report, which shows the unemployment rate stands at 4. 1 percent, the highest figure in just three years.
But rate cuts are a signal to lure investors into the stock market en masse, Kelly said. He pointed out exorbitant valuations, the S
“This is a time where we have to be very cautious, because valuations are at an all-time high. We had a massive rally last year and this year,” Kelly told CNBC on Friday. “Overall, those markets are at an all-time high and, sooner or later, “We’re going to see a significant correction. “What I know from past corrections is that when you’re in a correction, you don’t need to be in the most expensive sector. “
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“In a way, the economy is creating bubbles in the markets because it is very stable. But I noticed this continued upward trend in inventory prices. I think it’s a time when other people have to be very careful to diversify their exposure and not be overexposed to the most beloved names,” he added.
Kelly’s stance mirrors that of bearish forecasters, who have warned of a correction on the horizon as stocks appear overvalued. By some measures, the S-index
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