Finance
Fed must cut rates more aggressively due to jobs: Canaccord Tony Dwyer
The Federal Reserve may have new incentives in the second quarter to cut rates deeper this year.
Canaccord Genuity’s Tony Dwyer thinks a deteriorating jobs market and easing inflation will ultimately push the Fed to act.
“I’m not saying that they have to go back to zero, but they have to be more aggressive,” the firm’s chief market strategist told CNBC’s “Fast Money” on Thursday. “One of the most aggressive topics that I talk to clients about is how bad the incoming data is.”
Dwyer contends falling employment survey participation rates are skewing the Bureau of Labor Statistics’ jobs report data. The next monthly jobs reading is due Friday.
“It’s not that they’re manipulating the data. The conspiracy theories go bananas with this stuff. It’s really that they don’t have a good collection mechanism. So, the revisions are significant and most of them have been negative now,” said Dwyer. “Our focus now is those rate cuts are what you need.”
At the March Federal Reserve policy meeting on interest rates, officials tentatively planned to slash rates three times this year. They would be the first cuts since March 2020.
Dwyer expects the rate reduction will give financials, consumer discretionary, industrials and health care stocks a boost. The groups are positive this year.
“Our call is to buy into the broadening theme on weakness rather than simply adding to the mega-cap weighted indices. The top 10 stocks still represent 33.7% of the total SPX [S&P 500] market capitalization,” he wrote in a recent note to clients. “History shows that is historically high and doesn’t last forever.”
According to Dwyer, market performance will become much more even by the end of this year into 2025.
‘It’s not just the Mag 7’
“It’s coming from a broadening of the earnings growth participation. It’s not just the Mag 7,” he told “Fast Money.”
The “Magnificent Seven,” which is made up of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla, is outperforming the broader market this year — up 17% while the S&P 500 is 10% higher.
The S&P 500 closed at a record high on Thursday and just posted its strongest first quarter gain in five years.
“When you’re this overbought and this extreme to the upside, you just want to wait for a better opportunity,” Dwyer said. “In our view, that comes with there is worsening employment data that cuts rates. You have to worry about the economy. That’s when I want to go in.”
‘The Big Money Show’ co-hosts discuss buy now, pay later spending options and the impact it will now have on your credit score.
Small, everyday purchases like a meal from DoorDash are now able to be financed through eat now, pay later options — a practice that some experts deem “predatory.”
“You’ve got to have enough sense to not follow the urge to finance a taco, okay? You have got to be an adult,” career coach Ken Coleman told “The Big Money Show,” Wednesday.
“This is predatory, and it’s going to get a lot of people in deep trouble.”
RISKS OF BUY NOW, PAY LATER: ‘TICKET TO OVERSPENDING,’ EXPERT SAYS
DoorDash and Klarna are now partnering up to extend buy now, pay later options to consumers. (Reuters, Getty / Getty Images)
Financial wellness experts are continuously sounding the alarm to cash-strapped consumers, warning them of the devastating impact this financial strategy could have on their credit score as some lenders will begin reporting those loans to credit agencies.
Consumers may risk getting hit with late fees and interest rates, similar to credit cards.
“So your sandwich might show up on your FICO score, especially if you pay for it late,” FOX Business’ Jackie DeAngelis explained.
EXPERTS WARN HIDDEN RISKS OF BUY NOW, PAY LATER
Major players like Affirm, Afterpay, and Klarna have risen to prominence at a time when Americans continue to grapple with persisting inflation, high interest rates and student loan payments, which resumed in October 2023 after a pause due to the COVID-19 pandemic.
Ramsey Solutions personal finance expert and ‘The Ramsey Show’ co-host George Kamel discusses the ‘buy now, pay later’ craze and the trend that celebrates the financial benefits of being childless.
“The Big Money Show” co-host Taylor Riggs offered a different perspective, suggesting that company CEOs have a “duty” to attract as many customers as they want.
“Unfortunately for me, this always comes down to financial literacy — which I know is so much in your heart about training people to save now by later,” she told Coleman, who regularly offers financial advice to callers on “The Ramsey Show.”
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Coleman continued to come to the defense of financially “desperate” consumers, arguing that companies are targeting “immature” customers.
“I’m for American businesses being able to do whatever they want to do under the law. That’s fine. But let’s still call it what it is: it’s predatory, and they know who their customers are,” Coleman concluded, “And I’m telling you, they’re talking about weak-minded, immature, desperate people.”
FOX Business’ Daniella Genovese contributed to this report.
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