'You Can't Have Your Cake And Eat It Too:' Top Asset Manager Discusses Shift In Sentiment Amid Stocks Downturn

Volatility spiked in the equity markets after inflation print came in higher than estimates for the third consecutive month this year. Top asset manager VantageRock's Avery Sheffield believes that the bulls are beginning to see this too, now.

What Happened: Sheffield says that while bulls have been waiting for positives like "lower unemployment, lower costs, lower rates, lower inflation," the reality is that inflation has remained stickier for longer than it was expected.

"You can't have your cake and eat it too," Sheffield quipped in an interview with CNBC.

The CBOE volatility index, or VIX, spiked the most in over a year on Friday amid an increase in geopolitical tensions in the Middle East.

Higher-than-expected inflation also means that the highly-anticipated rate cuts that bulls have been looking for will now have to be delayed.

See Also: Inflation Upends Fed's Plans: When Do Wall Street Analysts Expect First Interest Rate Cut?

Bulls are "looking for growth enabled by higher wages, higher prices and higher government spending."

However, Sheffield highlights a vicious cycle here wherein increased government is feeding into inflation being "higher for longer."

"It kind of makes it harder to have low rates come soon enough to stimulate the economy for the next leg up."

Sheffield added "Bulls have gotten ahead of themselves. Valuations have been expanding, year-over-year, valuations are up 25% while earnings estimates are actually about flat. Something needs to give."

Did anything meaningful change for the bulls this week? "I think the bulls began to recognize that you can't have your cake and eat it too," says VantageRock's Avery Sheffield pic.twitter.com/KcJcOlozCE

— CNBC's Closing Bell (@CNBCClosingBell) April 12, 2024

Why It Matters: Hopes of Federal rate cuts have decreased after the March inflation print came in higher than what was estimated.

According to the CME Group FedWatch tool, expectations of a June rate cut have fallen from 54% to just 20%.

Some analysts now expect just one rate cut this year, that too in December.

According to the University of Michigan, consumer sentiment fell due to an increase in economic anxiety resulting from an increase in inflation.

Read Next: Warren Buffett’s Berkshire Hathaway Adds $116.58M Worth Of Liberty SiriusXM Stock

Photo generated using Midjourney