Fed minutes indicate smaller rate hikes ahead: time to buy?

on Nov 24, 2022
  • FOMC meeting minutes signal smaller rate hikes are coming 'soon'.
  • Jerry Castellini explains what it means for the equity investors.
  • S&P 500 index is still down more than 15% versus the start of 2022.

Follow Invezz on Telegram, Twitter, and Google News for instant updates >

S&P 500 ended in the green again after minutes from the Fed’s most recent meeting confirmed that officials agreed on switching soon to smaller rate hikes.

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

Should you turn bullish on equities now?

Copy link to section

Reacting to the summary on CNBC’s “Power Lunch”, Jerry Castellini – the Chief Investment Officer of Castleark Management said it served to further exhaust the bear case for the equities market.

You’ve got very attractive bond yields. People are going to start buying bonds and that’s going to spin over to the valuation of equities, which we think could be really cheap based on individual companies.

For the year, the benchmark index, despite a significant recovery in recent weeks, is still down more than 15%. Expectations are now for a 50-bps increase in December following the recent CPI print that told a tale of peak inflation (detailed here).

Put together, not may be a great time to hunt for quality names on a bargain.

Castellini reveals a few stocks he likes

Copy link to section

In terms of what to own, Castellini recommends companies with a reliable free cash flow and ability to meet or beat earnings estimates. A name that matches that criteria is Exxon Mobil Corp (NYSE: XOM).

He finds it a safe investment even if oil prices slip to sub $70 level. Other than that, Castellini is bullish on a bunch of retail names as well.

Ulta Beauty, Macy’s, Dick’s, Best Buy, Home Depot have told things a cautious management wouldn’t at the verge of hard recession. They said consumer is better than you think. These names will see earnings surprise over the next nine months.

Even if the U.S. economy ends up in a recession, it will likely not be a deep one, Castellini concluded.


Want easy-to-follow crypto, forex & stock trading signals? Make trading simple by copying our team of pro-traders. Consistent results. Sign-up today at Invezz Signals™.

Learn more
ExxonMobil USA Indices North America Stock Market World