RBC Capital Market's Lori Calvasina: Markets are still focused on Fed cuts right now

Market Overview - The market is currently focused on potential Federal Reserve interest rate cuts, which have been anticipated for several months [3][7][10] - Despite some concerning macroeconomic data, equities are looking past these issues, indicating a complex relationship between inflation and equity performance [1][5] Inflation and Equities - Inflation pressures are building but are not yet overwhelming, with economists expecting certain trends to emerge in labor market reports [2] - Historically, rising inflation has led to increased equity allocations among households, suggesting that the market is currently responding to positive tailwinds despite headwinds from inflation [5] Seasonal Trends - There are concerns regarding the typical negative seasonality seen in September and October, although the market has reached new highs without significant labor market disruptions [6] - Investors are cautious about potential ripple effects from earlier policy disruptions, which could impact market performance [6] Federal Reserve Expectations - The market is anticipating a rate cut next week, with expectations for additional cuts throughout the year and into 2025 [8][10] - There is a debate among investors about the timing and pace of these cuts, with some suggesting that expectations have been pulled forward [9] Valuation Considerations - Current peak valuation levels necessitate careful consideration of market conditions, as much of the anticipated positive developments may already be priced in [10]