Penn Mutual Asset Management portfolio manager George Cipolloni joins Market Domination to break down the second quarter earnings season and market performance ahead of the 2024 election.
“We have already seen a kind of mixed earnings outlook so far. Now obviously, more companies have beat than missed, but the big thing is that expectations are really high now,” Cipolloni states. As earnings growth has been largely concentrated in the tech sector, he says, “I have to give them all the credit in the world. They have delivered on earnings growth, and they’re going to have to keep doing that given where valuations are.” Cipolloni explains that high interest rates have “punished” small caps, since they have a more variable rate debt than large caps do. When the Federal Reserve begins cutting rates, he believes sectors like financials will perform better.
As the 2024 election heats up, former President Donald Trump will likely push for interest rate cuts, which could benefit some stocks. On the other hand, his aggressive tariff policy could be inflationary. As uncertainty about the November election mounts, Cipolloni encourages investors to “understand policy” to make strong investment decisions: “If you look at the yield curve for example… the shift in the yield curve has been amazing just in the last few weeks.”
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