Will US elections influence Federal Reserve's interest rate decision? Santosh Rao answers
«I mean, for them, for the banking sector, the whole slowdown going towards the recession, if there is one, that is a negative, so that could have played into the banking sector selling off,» says Santosh Rao, Manhattan Venture Partners.
More inflation and labour data, I guess that is what investors are bracing for. But how is it that you have read into the inflation print? And does it seem like a September rate cut is pretty much par for the course now?
Santosh Rao: Yes, in fact, after today's data 25 basis points is par for the course now. But down the road, there is some chatter that he might continue to cut rates down the road, so maybe two or three, so that is good.
I mean, anytime you cut rates, it is good for growth stocks. It kind of gets less restrictive. The housing market picks up. The mortgage rates are down quite a bit. So, a lot of things depend on these rates coming down, so that is a good sign.
And today we saw the Nvidia CEO at the Goldman Conference, he had some good commentary on the semiconductor space, so that triggered the whole rally. And Nvidia has always been the leader of the pack, so the semiconductors rallied there as well.
And overall, after we digested what Jamie Dimon said yesterday or the day before, it is not that bad. He said that the margins are down as the interest rates come down, the net interest margins come down, so overall the banking sector is going to be under pressure. But people are saying it is not going to be that straightforward. There are other issues.
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