Expert opinion: ‘market has put in a bottom’

on Jul 15, 2022
  • Brent Schutte says the market has already priced in an aggressive Fed.
  • The Northwestern CIO is convinced that U.S. inflation has now peaked.
  • The benchmark S&P 500 index continues to dwell under 4,000 level.

The U.S. economy is not very likely to plunge into a deep recession, says Brent Schutte. He’s the Chief Investment Officer at Northwestern Mutual Wealth Management.

Lower low is unlikely

Schutte says the market has already priced in an “aggressive” Fed and so, the probability of a lower low is rather bleak. Speaking with CNBC’s Michael Santoli this morning on “Squawk on the Street”, he said:

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We’ve peaked on these rate hike expectations somewhere in the middle of June. Since then, they’ve come back and stabilised. I think as long as you see that continue, the market has put in a bottom.

But that doesn’t mean the equity market is all set for a rally to the moon. Schutte does expect the S&P 500 to remain range bound as long as the economic data doesn’t start to turn more positive.

Inflation has peaked

Earlier this week, the U.S. Bureau of Labour Statistics said inflation topped 9.0% to hit a new forty-year high in June. Still, Brent Schutte is convinced the consumer prices have “peaked”. He added:

You’re starting to see forward-looking indicators of inflation come down. Contemplate that Spot Commodities are off 21%. That is set to have a pretty chilling impact on inflation in the coming months.

The U.S. central bank is scheduled for its next policy meeting in the final week of July. Schutte says the main rate at about 3.75% by year-end is “palatable” and expects the Fed to turn less hawkish once the CPI begins to come down.  

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