The Fed made a mistake in hiking rates in December, and it will take two rate cuts to correct, says Stifel's Barry Bannister.
Fears of a global recession are on the rise, part of the yield curve has inverted and earnings are expected to slow this year.
"The economy is about six months after Fed action. The Fed over-hiked by twice in the fourth quarter and that was really part and parcel why we had such a big sell-off. The economic effect of that is going to show up towards mid-year," Bannister said Thursday on"Trading Nation." Its forecast looks markedly different just months later. By its March meeting, the Fed had ratcheted down expectations to zero rate hikes this year and the market is even pricing in the potential for a rate cut in 2019.
"We know the first quarter is weak but if it continues into the second quarter, that's going to be evidence that the market was right back in the fourth quarter. The problem the Fed has is it's kind of a chicken and an egg. They're going to have to see some eggs broken in the economy before the Fed goes chicken," he said.
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