Last week, we had the pleasure of hosting a private roundtable discussion for our clients, featuring Liz Ann Sonders, Managing Director and Chief Investment Strategist at Charles Schwab. Liz Ann is considered an industry expert, named by Barron’s as one of the “100 Most Influential Women in Finance”, for the third consecutive year, and one of the 25 most important people in and around the financial advisory profession by Investment Advisor. Our clients had the opportunity to submit questions in advance for Liz Ann, which guided the majority of the discussion. Highlights from her presentation are included below.

Key Takeaways From Liz Ann Sonders of Charles Schwab

• Inflation: Headline inflation will likely continue falling closer to the Fed’s targets by year-end.
• Recession Talk:
  • We are in rolling recessions, where parts of our economy are struggling, while others are flourishing. For example, the goods sector is weakening because spending is slowing, but services are in demand, keeping labor strong.
  • If a formal recession occurs, Liz Ann believes it should be relatively mild and nothing like what we saw in 2008.
• The Fed:
  • Liz Ann believes the Fed will likely raise the Fed Funds rate by 0.25% in February and probably another 0.25% in April and then pause.
  • She doesn’t see the Fed lowering rates until at least 2024. However, the market view is the Fed may pivot and lower rates later this year.
• Stock Market:
  • Liz Ann does not think U.S. stocks are out of the woods just yet, even as valuations look better because earnings may start to fall.
  • Negative investor sentiment readings are near all-time highs. She cited the American Association of Individual Investors (AAII) sentiment survey.  Their survey has shown that these high negative sentiment readings point to stock market bottoms in the past.
  • Foreign stocks look more attractive than domestic stocks after a nearly dozen-year cycle of underperformance, but challenges remain globally. According to their team, they see better returns coming from overseas.
• She thought the recent bear market was not a bubble that popped, but more about a swift change in monetary policy that caught certain parts of the stock market like the technology sector, off-guard.

We appreciated Liz Ann’s insightful commentary as her words hold weight among peers.  We strive to capture as much insight as possible to help support our research efforts and decision-making.