Doug Cohen, managing director at Fiduciary Trust International, spoke with Quartz for the latest installment of our “Smart Investing” video series.
Watch the interview above and check out the transcript below. The transcript of this conversation has been lightly edited for length and clarity.
ANDY MILLS (AM): A survey on small business optimism recorded its lowest levels in 11 years. People are still concerned about inflation. Are those concerns justified?
DOUG COHEN (DC): On paper we’ve got almost record low unemployment, a booming stock market, inflation that’s come down significantly and yet people are still not particularly happy. Most sentiment polls show that, and inflation is definitely part of it. I think when you look at food prices in particular, energy prices starting to go back up again, the things that most people actually consume every day, it’s problematic and it is something that we’re gonna hear a lot about going into the election. And I think there are some longer term concerns about inflation coming out of this incredibly unusual period with the pandemic where we had so much stimulus thrown into the economy, both fiscal stimulus and monetary stimulus, and we had all the supply chain disruption. So we’re still working through the last parts of some of that. But the deglobalization that’s out there, the stickiness of wages, even unions coming back and getting a little bit more power, all of those probably are gonna make inflation more sticky than certainly the folks at the Fed would like.
AM: Speaking of the Fed, what do you think they’re gonna do as far as rate cuts go?
DC: We started the year with the market expecting six or seven cuts. We’re now down to kind of two or three. If they don’t cut at all, I think that’s gonna be an embarrassment for them in some ways. Now, of course, everything is data dependent. I certainly don’t think they’re gonna cut six or seven. I suspect they cut once or twice, but before you know it, we’re gonna be in the heart of the political season. And although they’ll deny it, they’re in Washington DC there is a political element to what they do. I don’t think they’re gonna want to do too much right in front of the election. So my guess is we get one or two cuts, but no more than that.