Ashley Mastronardi: Jess Inskip, Jess, you are very much a creator. You are at the NYC Creator Summit today in a fireside chat. What is the state of the creator economy?
Jess Inskip: So the creator economy is extremely important as we’re thinking about the resilient consumer and what’s propping up the markets. That’s a huge component of it, because you think about the great financial crisis, post-great financial crisis. We didn’t have the means of Uber or DoorDash or the gig economy and the creator economy. So it’s a piece of the resilient consumer.
But what’s really interesting in the room, because NYSE is just very innovative with the storytelling: when you are a content creator, you’re ultimately a storyteller, but you’re a means of marketing distribution. So there are lots of content creators over here. And what is interesting, it’s all full of business acumen. These are creators that are taking equity in businesses. They are creating their own software, but they’re thinking more longer term. And it’s interesting how traditional finance media is really, really transferring over.
Ashley Mastronardi: All right. And I just want to get a shot of our creators. If you can get a shot of our creators from the NYC Creator Summit today, creating some great content on the floor of the New York Stock Exchange. All right. And let’s get down to numbers. The S&P 500 above 1,700 [figure unclear; check audio]. Do you think we’re going to see 8,000 by the end of the year?
Jess Inskip: I think that’s really tough. So the reason why we’re able to close above that today is simply because oil is coming down. So this is an oil-led rally, but a broad-based oil-led rally, which is really, really fantastic. The risk is, as we’re coming into midterms, that’s going to give us a little bit of relief because we’re going to have some certainty. The market does not like uncertainty.
But if we don’t have any resolution with yields, that puts a ceiling on the market, meaning as long as yields stay where they are and we don’t have another parabolic move, then we could move higher. But earnings have to follow through. So it’s very important what banks tell us next week as we head into earnings season. What does credit stress look like? Are there additional loan provisions? Understanding that will give us an indication into the health of the consumer, but ultimately into this financing, and understanding where earnings season is going to position us.
So it’s possible, but we need record earnings, which we have had. But we also desperately need stabilization in yields. So hopefully it stays where it is, but that’s very much an unknown.
Ashley Mastronardi: Do you think yields are having a bigger impact on markets right now than oil, or a little bit of both?
Jess Inskip: It’s a little bit of both, because right now yields are increasing because of oil. So oil is impacting yields. But also yields are increasing because of the federal deficit. Yields are increasing because of inflation expectations, but that’s fueled by oil. And it’s leaking into the longer-term implications.
So for example, post-Iran conflict, the 2-year was rising more than the 10-year. Now the 10-year is moving more. In more simple terms, that means shorter-term inflation expectations have bled into longer-term inflation expectations. So the way that we can get some resolution for that next week is CPI and getting some inflation data. And if that comes in in line or is cooling off, then yields should subsequently cool off as well, because the fear that it’s bleeding into these longer-term inflation expectations could be subsided.
Ashley Mastronardi: That’s right. CPI and PPI released next week. What do you think it will tell us about the state of inflation? And how much of an impact could that have on the Fed’s next meeting on October 28th?
Jess Inskip: I mean, it’s going to have a huge impact. They’re a data-dependent Fed. So it’s extremely important to understand that. There was a wonderful study that was recently released of how much of inflation was actually tariff-driven. If we were to take out the tariffs, it actually would put us in line with the Fed’s goal. So I’m wondering, since that was a Federal Reserve study from one of the Federal Reserve banks, if that would be referenced. Not sure. That’s very much an unknown and speculation on my part, but it will just tell us simply where inflation is.
The Fed needs to take that. Their goal is to anchor us to that 2% inflation. If it’s cooling off, then we’ll have a less restrictive Fed and the market will like that. The market generally rallies off of that.
Ashley Mastronardi: And we’re seeing investor confidence waning in terms of a rate hike in October. What do you think is going to happen in October? And do you think, if not in October, we’ll see another hike before the end of the year?
Jess Inskip: So I didn’t even agree with this first rate hike, actually, because this rate hike was a credibility rate hike. When Fed Chair Warsh came in, he had this political cloud over his head, which was essentially asking the question, were you a political pick? And now that we’ve had this inflation expectations rise, what happens with yields? He had to raise interest rates in order to have credibility. That is fantastic. He has that. He won that over. That tamed bond markets temporarily. [Brief audio gap.] The consumer is already constrained, and that’s where this is coming from.
So it’s all really dependent on what happens with inflation, if we should raise rates or not. But I think as of right now, the trend looks fine. It’s cooling. We’ve had better expectations with inflation. So it really depends on that CPI number. But personally, I don’t even think this last one should have happened. But it should have, because of the credibility aspect.
Ashley Mastronardi: Great. Jess Inskip from stockbrokers.com, thanks so much for joining us here at the New York Stock Exchange.
