David Bianco, DWS Group Americas CIO, joins 'Money Movers' to discuss the record high for the indices, his market and Fed outlook.

David Bianco, Chief Investment Officer at DWS Group America, believes the US economy is performing well enough that interest rate cuts are not currently needed. He points to robust corporate profits, record-high stock market levels, and resilient investor sentiment as indicators of economic strength. Bianco also emphasizes the importance of the Federal Reserve demonstrating its independence and maintaining a clear commitment to achieving 2% inflation.

He notes that recent legislation provides some benefits to companies, such as R&D and capital expenditure expensing, but does not significantly alter the corporate tax rate. Bianco cautions that premature rate cuts by the Fed could unsettle bond and currency markets, and advises careful monitoring of economic data before making policy changes.

The economy doesn't need rate cuts now, says DWS' David Bianco

Joining us at Post 9 with his outlook is DWS Group America CIO David Bianco. Happy Monday, David. Good to see you. Thanks, Cole. You make the point that as, I mean, Journal's got a piece out today, economy's getting its swagger back. Right. You think if that process continues, then you can take a lighter touch with any kind of rate cuts, yes? I don't think the economy needs rate cuts right now. And with all the controversy around the Fed, it's important the Fed demonstrate its independence, maybe take a close look about how it makes decisions. But the institutions sound. Yeah, I think the stock market had S&P at record highs, 8% up year to date. We could talk about valuations. Valuations are high, but investors don't seem to be too concerned about it. Yes, there's swagger there. We've seen corporate profits weather all of the challenges thrown at them over the past handful of years. And maybe that's what keeps the equity market so excited, that if there's macro challenges out there and the companies overcome it, maybe that's the reason why they're paying up on these valuations. We'll hear from many companies this week. We're basically getting the results that we expected. Mind you, we expect earnings to be about $65 this quarter, $2.60, $2.65 annualized. We started the year at $2.75. But the tariffs and other challenges in the world have weighed on profits. And then people are dissecting equal weight S&P versus regular S&P. I mean, Russell hasn't hit a new high for 900 trading days. That's right. We've seen a little bit more participation, small caps and broader. But big cap, big is beautiful, still leading, magnificent seven, most of them still doing extremely well, especially if it's related to AI. We are encouraging investors to look for diversification, but do so carefully with active managers, whether it be small caps or international stocks. Look for the opportunities, because in most cases, those markets are just not as high quality or growthy. What about the new legislation, the big, beautiful bill? Do you think that's factored into earnings expectations, or should it be? I noticed because Verizon mentioned it as one of the reasons for a better outlook. There are a couple of things in there that are good for companies, R&D expensing, immediate expensing of CapEx, ability to more fully deduct interest expense. These are small things. The corporate tax rate stayed 21 percent. We expected that. It did not go down. But it's really about tech. And then things like currency, the dollar, that are influencing our S&P outlook at the margin, we thought maybe it would take a little bit more time to get the one big, beautiful bill done. And there wouldn't be as many goodies in it for households in particular. But it's done. And that's why we're focused on the bond market, how it's reacting to it. And I think it's really important. The Fed communicate its commitment to 2 percent inflation. It's not a nice-to-have. It's time to get there. How would you grade the bond market's reaction and the steepening that we have had, today, notwithstanding? I think the bond market goes back and forth, where there's been an upward trend in long-term yields, but then it's an enticing overall yield. So you can see how investors, every time the bond market creeps up to newer highs, four and a half, 10-year, 5 percent on a 20-year, a little bit more than that on 30. But last week, we had 5 percent on the 20-year. It brings in buyers. But there's this concerning upward trend on long-term interest rates. Let's make sure the Fed doesn't make that worse. What if the Fed starts cutting? Does that change or not? I think if the Fed cuts prematurely, and if we can argue when that is. What is prematurely? Don't cut this month. I don't see the need in September, but we'll keep an eye on all the data. If the Fed's perceived as cutting prematurely, it not only might spook the long-term bond market, but particularly the dollar and the currency market could come under pressure.

Protestors showed up at the federal courthouse in Boston on Monday amid Harvard's $2 billion legal battle with the Trump administration.

Boston

Protestors gather outside courthouse amid Harvard-Trump hearing

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Los Angeles

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New York

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Dhaka

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Tehran

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As Suwayda

Bedouin civilians evacuate Syria's Sweida as tense truce holds

Japanese Prime Minister Shigeru Ishiba vowed to remain in office on Monday after his ruling coalition suffered a bruising defeat in upper house elections, prompting some of his own party to deliberate his future as the opposition weighed a no-confidence motion.

Tokyo

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Japan's ruling coalition loses control of upper house

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Middle East Conflict

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Washington

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U.S. President Donald Trump has sued the Wall Street Journal and its owners including Rupert Murdoch for at least $10 billion, over the report that his name was on a 2003 birthday greeting for Jeffrey Epstein that included a sexually suggestive drawing and a reference to secrets they shared.

Trump sues Wall Street Journal for $10 billion over Epstein report

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Caracas

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Japanese voters headed to the polls on Sunday (July 20) in a tightly contested upper house election that could unleash political turmoil, with rising prices, immigration concerns and the emergence of a Trump-style "Japanese-first" party threatening to weaken Prime Minister Shigeru Ishiba's grip on power.

Japan heads to the polls for Upper House elections

The violent clashes between the Druze minority, Bedouins and other armed groups in the southern province of Sweida have left at least 900 people dead. Some reports suggest that fighting may have halted early on Sunday.

Damascus

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Kyiv

Ukraine Invasion

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Hạ Long Bay

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London

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Moscow

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