Midday trade. U.S. stocks are down and bond yields are soaring. Now the countdown is on. Tomorrow morning's inflation data in terms of CPI is in the spotlight ahead of the September Fed meeting. Now rate hike. Expectations are already spiking on higher oil prices following today's wholesale inflation data.
Now, looking in the rearview mirror, the Treasury Department did announce that it is officially tripling its buyback operation of longer dated bonds to $6 billion. But joining me this afternoon is Jonathan Pina senior managing partner for Meridian Equity Partners, to weigh in. Jonathan good afternoon.
A lot going on in terms of the markets. And we just saw WTI crossed that $101 level. So what do you make of this price action.
We continue to see a lot of volatility across all asset classes. I was on your show about three months ago a little summer hiatus. And we're still going to talk about the same things that we talked about before this summer. Right. Inflation number. Oil prices, interest rates, geopolitical risks. It's the same headlines from months and months ago, and we're continuing to see some of all these topics escalate in the wrong manner, in the wrong fashion, in the wrong direction.
So we're going to continue to focus on this stuff here. But what we're looking at now is continued pressure on our markets. Inflation numbers continue to move higher and higher with the escalation, the current escalation that's going on in the Middle East. Oil prices are above the $100 level. And as we see that occur, the market acts conversely to that.
What's interesting is I would think the VIX would be a little higher than where it is right now. Right. We've had a lot of volatility in our markets. And the VIX has been staying below that 20. Psychological number there that level that's there. So I'm expecting the VIX to have a move there too. Or this market's going to be able to find some ground and solidify itself.
We've got FOMC next week. All indications are leading to a hike. It's going to be interesting to see how the market reacts to that. And then the the comment in question and answer period after. After the meeting of why did they hike now? What was their thought process? I know we don't get future guidance from this chair, but we'll try to see if we can piece together their thought process and and estimate what's going to happen in the future.
And not only are we paying attention to inflation figures, because we all know the Federal Reserve will be watching not just those CPI figures, but also PCE later coming out this month. But it's all about the rate trajectory moving forward. And when we look at the markets, we are seeing red today. And that is on the heels of what we saw since the beginning of this holiday shortened week.
But we have to keep in mind that earnings has been strong in terms of what we saw for results. And of course we're getting Oracle Adobe after the bell. But what are the key takeaways and how much does seasonality actually factor in.
It's a great point. You kind of have to look at things on a high level, right. Like where were we six months ago or a year ago. And where are we now? Our focus has been shifted to certain components of our market. But when you get back to the fundamentals of of what our market is made of, things have certainly gotten better.
We've seen improvements in our markets. We've seen positive returns in our markets. We can debate whether those moves were too far, too fast. But overall we are seeing sell pressure on our markets. But if you keep it all perspective and keep it all relative, things are positive. We've gone through multiple earnings seasons.
Why we've had these geopolitical risks occur and earnings seasons continue to be positive. We see a lot of capital spending. We see M&A coming back into play. We see a lot of IPOs that have been on the calendar that have been waiting and have come to market. So I think overall, the sense our economy is strong.
Companies feel comfortable to come back to market, but we still have these headwinds like we discussed with interest rates, inflation, oil and our geopolitical risk. The uncertainty there is going to kind of keep a top on our market Until we get some clarity as to where this goes, we're going to get some clarity probably next week from the fed.
We're going to see how our economic data and fed raising the interest rates, the impact of that on inflation. Hopefully in a very short period of time, we see some sort of resolution in the Middle East that will help our spending that's going on there. Plus the impact on oil that's affecting everyone, not just in the United States, globally.
So there are some headwinds that continue to be there. But I think overall, if you take a snapshot where we were January 1st to where we are today, it is a positive momentum.
Yeah, and a lot to keep our eyes on, not just here in the US but also overseas, because when we think about the gains in energy prices, we know how it affects monetary policy around the globe. And that is something that we'll continue to monitor. But finally, before I let you go, I do want to get your perspective on what we're seeing in terms of sectors.
And I know that there have been some upgrades in terms of price targets for the S&P 500. Year end. But in terms of sector, what are you seeing right now and what are your expectations as we head into your end?
Yeah. So I think we see, uh, you know, the the tech sector has been a quick rotation in and rotation out. Investors feel comfortable getting into it. They've seen positive returns to it. But when the tech sector turns it turns fast. We are getting some earnings after the close today I'm thinking that's going to add some positive sentiment in the tech sector there.
So we might see after this recent pullback we might see some favorable interest there. As M&A activity has picked up, an IPO activity has picked up and volatility in our markets have picked up the financial sectors, banks the big banks have done very well with that. We've seen multiple earnings reports clearly stating to us that their trading activity, their investment banking activity has really helped that area.
There. We've seen investors move into higher dividend stocks, some more defensive stocks as we continue to see this volatility. But we're in this weird area right. Because I can talk about all these positive things. I could talk about these headwinds. You put the VIX at 17 17.5 where it's at right now.
There's just a kind of big disconnect that's going on. And I feel it. Investors feel it. So that forces them not to sell out of the market just to participate less until things settle down. There's certainly cash on the sidelines that's waiting to come in. It just doesn't know when that when that right time is.
And then fast forward we're getting towards midterm elections. That's going to cause some pause bleeding into it. It will cause some reaction after it. But we're going to have to kind of limp to that that time frame in our calendar.
Yeah. And Jonathan, before I let you go, I know that you've been here for many years. You've been through different election cycles, not to mention fiscal as well as monetary policy cycles. So what do you make of where bond yields are right now and where do bonds actually belong in a portfolio.
So bonds certainly belong in a portfolio I think portfolio diversification is very important. Again I'm going to use the word disconnect. There's a big disconnect that's going on between our economy, between our markets, between interest rates, between bond prices. It it causes confusion. It causes investors to take a pause.
We're going to continue to see this. But as as we start to see bond yields move in the direction that they've been moving, we're going to have an impact on our economy to that. We're going to have an impact on our stock market for that. And then you throw an oil into the mathematical equation of all of it, and it and it adds this kind of cloudy gray area.
So I am overall optimistic on our economy and our future. I think it's going to be a little bit of a choppy time until we get through the elections.
Well, Jonathan, I appreciate you breaking all of this down. There are a lot of moving parts here. So thank you so much for sharing your perspective as well as all of your insights.
Thank you for your time.
Thank you.
