Experts Julia Coronado and Eric Freedman in the video except below see slowing growth ahead for the U.S. economy, leading to a more cautious and balanced investment outlook ahead. Freedman believes the “elevator ride down, stair climb back up” that we’ve experienced in the markets since December amounts to a relief rally, and not a reason to pile into risky assets.
Specifically, Coronado speaks to the Fed “collar” existing today, a twist on the long held view of a Fed “put”. Whereby a Fed “put” is the belief that the Fed will step in to save investors from significant downside in the markets, the “collar” is essentially saying that the Fed will similarly step in to prevent the markets from rising too fast. If economic conditions strengthen significantly and the markets once again take off, the Fed may have no choice but to become more hawkish on rates, ultimately limiting the market’s upside potential.