Perspectives
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Video
Eric Lynch on Reuters TV
September 13, 2024
With the Fed meeting this week to discuss cutting interest rates for the first time since 2020, the big question now is how big a cut? “Whether it’s 25 or 50 basis points, I don’t think it matters too much,” said Eric Lynch, managing director at Scharf Investments during an appearance on Reuters TV on September 13, 2024. “What’s more important is what the general trend looks like for the remaining Fed meetings this year.” Eric shared that consumers will see some relief in the short term for those with variable interest rates on credit cards. He also mentioned that first-time homebuyers will also benefit as mortgage rates start to come down from their recent peak. As for the impact on equities, Eric believes a 50 basis point cut would add “renewed vigor to the equity markets.”
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Lynch: “It’s really a good time to broaden out your portfolio”
September 11, 2024
While the Fed is poised to begin interest rate cuts next week, investors are concerned about the economy and whether we will have a soft landing. “Right now we are still doing alright, and if the Fed can mildly reduce rates and jobs growth continues, then we need to start looking more closely at earnings growth,” said Eric Lynch, managing director at Scharf Investments during a recent appearance on Yahoo Finance. We saw broad-based earnings growth in Q2 outside of tech. So far in Q3, we’re seeing negative returns for the IT sector and other sectors that were laggards a year ago now becoming leaders with real estate, consumer staples, and health care delivering positive returns. “It’s really a good time to broaden out your portfolio without a lot of risk as these are defensive sectors.” Eric's interview begins at the 3:19 mark in the link below.
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Eric Lynch on Yahoo Finance
September 5, 2024
Berkshire Hathaway stock reached an all-time high last week and the company became the first non-tech company to surpass $1 trillion in market capitalization. “This is a fantastic play on higher-for-longer interest rates. We're all talking about some coming cuts, but they still are a lot higher than they've been in the last two decades,” said Eric Lynch, managing director at Scharf Investments. “If you look at what's happened with Berkshire, there's a lot of focus on the investment portfolio, but the majority of this business is now an operating company and an insurance company under that. And their investment income is skyrocketing with these higher rates.” Berkshire Hathaway is a core holding within the Scharf portfolios and has been for years. We see significant opportunities for investors and have strong conviction in Warren Buffett and his leadership team.
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Brian Krawez on Reuters TV
August 30, 2024
“Regardless of the jobs number, we believe the Fed will cut 25 bps and then a continued 25 bps from there,” said Brian Krawez, president of Scharf Investments during a recent appearance on Reuters TV. He noted that there wasn’t anything in the data or recent remarks from Fed Chair Jerome Powell that would suggest a need to panic and consider a 50 bps cut. Brian shared his thoughts on the concentration we’re seeing in the stock market with the top 10 stocks representing roughly 70% of the return of the S&P 500 this year, which is unusual. However, we’re seeing the market broadening out and there are opportunities for investors to look outside of mega-cap tech stocks. Brian highlighted what makes U-Haul a compelling investment opportunity.
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Krawez: Inflation, the Fed, and a Soft Landing
August 26, 2024
The Fed recently held their annual Jackson Hole economic symposium where Fed Chair Jerome Powell shared remarks regarding the economy and inflation, which he believes is on a sustainable path back to the Fed’s 2% goal. “The Fed has a really tough job, and I think this speech was a humble victory speech for Chair Powell,” said Brian Krawez, president of Scharf Investments during a recent appearance on Reuters TV. He noted that Powell took a lot of heat when inflation was at 9%, but that the Fed’s data-driven approach and Powell’s leadership should be appreciated given where we are today.
Insights
Krawez: “Trees don’t grow to the sky”
August 2024
Brian Krawez, president of Scharf Investments, recently shared his views on the current market environment in a feature by Olivia Bybel and Citywire Selector. This has been a market dominated by the Mag 7 and mega-cap tech stocks and Brian believes that the other 493 companies in the S&P 500 may be worth considering as monetary policy eases and the Fed is poised to cut interest rates. “You’ve had a very concentrated market. We think this could be sort of a rotation where stock returns in general aren’t as high, but it could be actually better for some of the average stocks.”