Danielle DiMartino Booth: Trump, Powell and US Recession Reality — Where to Focus Now

Weighing in on Fed Chair Jerome Powell’s November 14 comments, she said he remains steadfast in his message that while inflation is coming down to the Fed’s 2 percent target, there’s a bumpy path ahead that will require patience.

‘I think the idea here is not so much to hang onto every single word he’s saying about the economy, but rather to understand that he’s retaining flexibility and does not want to be pigeonholed into saying, ‘Okay, there was one report that came out and therefore we’re going to do this.’ I don’t think that’s his aim,’ DiMartino Booth explained.

In her view, the Fed is likely to cut by another 25 basis points at its next meeting in December.

DiMartino Booth also went over where investors may want to focus their portfolios right now, noting that in the current environment it makes sense to be defensive and protective of assets that generate returns.

‘To the extent that (investors are) going to be exposed to the stock market, they should also be focused on companies that behave like gold — that are defensive in nature, that have really strong cashflow streams and are able to maintain their dividends and provide safe harbor when other riskier asset classes don’t do the same,’ she said.

She added that even though the Fed is lowering rates, there’s a trend of investors turning toward cash.

‘It looks like they’re trying to pare back their risk exposure by increasing their cash holdings despite the fact that they’re getting a lower level of an interest stream off that,’ DiMartino Booth said.

Watch the interview above for more of her thoughts on the Fed, Powell and the outlook for the US economy.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.