Federal Reserve Chair Jerome Powell was at the Economic Club of Washington on February 7, 2023, holding a question-and-answer session with David Rubenstein. Investors globally were keenly looking for the message from Powell that can provide future direction to the markets. And, the markets did got the message loud and clear. Comments made Tuesday by the Federal Reserve’s Chair are likely to ‘kick start a year of important opportunities’ for global investors, predicts the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organizations.
The bullish prediction from deVere Group’s Nigel Green comes after Jerome Powell delivered his first remarks after Friday’s “extraordinarily strong” U.S. jobs report which, according to the central bank, shows it has more work to do to tame inflation.
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“We didn’t expect it to be this strong,” he said of the January jobs report, which found that 517,000 jobs had been added to the U.S. economy. “It kind of shows you why we think that this will be a process that takes a significant period of time.”
Of the comments, the deVere CEO says: “Of course, investors hang off every word of the Chair of the central bank of the world’s largest economy. So, naturally, when Jerome Powell said ‘the disinflationary process has begun’, markets jumped — despite him also adding notes of caution.
Nigel Green continues: “We expect that the Fed believing that ‘significant’ declines in inflation will occur this year is likely to kick start a year of important opportunities for global investors. Powell’s comments about the disinflationary process having begun will now dominate investors’ mindsets in 2023 as they seek to create and build wealth after a difficult 2022.”
Money making opportunities for investors will keep emerging in the market. “As we move into an era of peaked inflation, it’s crucial that investors ensure their portfolios are suitably diversified across asset classes, sectors, currencies and regions, so as to make the most of the considerable opportunities that will inevitably present themselves.” Investors should diversify their portfolios to capitalise on improving market conditions and avoid missing out on opportunities.”
Last week, as big tech firms posted earnings reports, the deVere chief executive noted: “As market environments shifted in 2022, investors dumped growth stocks, like tech, in favour of value stocks which were deemed more suitable to the challenging landscape. But what is happening now, we believe, is the beginning of a rebound. Tech stocks are back. Rotation into the right growth stocks will provide strong returns.”
Green cited two key reasons why he believes the big tech reports heralded the start of The Great Rotation back to growth stocks.
First, valuations of tech and other growth stocks are currently low, having been hit by the previous rotation into value stocks. Investors are now eyeing these attractive entry points to top up their portfolios as the trend is reversing.
And second, inflation has seemingly peaked, and interest rates are set to stabilise, which takes away a major obstacle for tech stocks.