Many predict the Fed will cut interest rates in the second half of this year. While Michael Landsberg, chief information officer at Landsberg Bennett Private Wealth Management, said the current situation does not justify a rate cut, he said it could be the case. “I think if Chairman Powell hadn’t said, we’re going to cut interest rates, we wouldn’t be having these discussions because earnings growth is so strong. Inflation is not really coming down,” he told CNBC’s “Street Signs Asia” last week. “So I think we’re going to get one because I think he’s been pandering and most people really want one, but actually I don’t think we deserve to get one. (But) I think we’re probably going to get one and be done with it, ” he added. The Fed has repeatedly said that inflation needs to fall to desirable levels before it starts cutting interest rates. At the June meeting, Fed officials said inflation was moving in the right direction but not fast enough for them to lower interest rates, minutes of the meeting released Wednesday showed. But Landsberg predicted that inflation may still rise slightly due to two factors – a surge in outbound shipping costs from China and rising oil prices. “I don’t think some of what we’re seeing is going to get better… I think those underlying effects will mean higher inflation later this year,” he said. He said the impact of soaring transportation costs has not yet been reflected in the U.S. consumer price index. But he added that this could happen in the fourth quarter of this year or the first quarter of 2025. Meanwhile, U.S. West Texas Intermediate crude has gained about 19% so far this year, after OPEC+ said earlier last month that it would extend crude production cuts until 2025. Investors should focus on companies with strong earnings growth. “The major stock indexes continue to rise based on strong earnings growth. Earnings growth is the theme of the game in the stock market right now,” he said in a supplementary note on CNBC. “Companies that continue to deliver strong results are being rewarded, and those that are not achieving that goal “Companies are being punished.” He also suggested adding some inflation protection to the portfolio through things like commodities or stocks with pricing power. Stock Picks Here are three stocks he likes: TJX Corp.: Landsberg said the department store is increasingly attracting higher-income consumers. “Their customer base is growing well. Affluent customers shop there. We think it’s an effective place to be,” he said. Stryker: Landsberg said the medical technology company’s “organic growth” has accelerated from single to mid- to high-teens as the surgical backlog normalizes. “They are one of the few people I think who are donors to these bariatric trucks. A lot of people in the United States need knee and hip replacements, but we are too overweight for surgery. These drugs can help people lose weight. Only then can surgery be considered,” he said. Trade Desk: Landsberg said the company plays a “leading role” in the ad tech industry, which “represents a huge potential market opportunity.”
