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- One market strategist doesn't expect the Federal Reserve to cut interest rates in 2024.
- Shipping troubles and geopolitical tensions in the Red Sea will spark a rebound in inflation, she said.
- The strategist added soaring prices and shipping delays are set to surprise the Fed and markets.
Wall Street largely expects the central bank to loosen monetary policy as soon as March, but one market veteran has taken the opposite stance.
Tracy Schuchart, chief executive and chief energy and materials strategist at Hightower Resource Advisors, told Fox Business on Monday that she doesn't expect the Fed to cut interest rates at all in 2024.
Many analysts and economists on Wall Street have forecast three to six rate cuts this year, but Schuchart pointed to rebounding inflationary pressures stemming from geopolitical conflict as reason to expect otherwise.
"Definitely don't think March is on the table right now," Schuchart said. "My main concern right now is what's going on in the Red Sea. We're already seeing insurance rates that are higher."
Inflation has been steadily cooling over the last year, but concerns about rebounding prices have emerged since the Houthis, an Iran-aligned Yemeni militant group, began their assaults on vessels in the Red Sea, which started after Hamas attacked Israel in October.
Shipping companies have since diverted their vessels to much longer routes. Swiss logistics firm Kuehne + Nagel, according to a Bloomberg report, calculated over 400 ships have been diverted since the middle of last month.
Big retailers including Next and Ikea, Schuchart said, have already said they expect two-and-a-half-week delays.
"Difficulties with access to the Suez Canal, if they continue, are likely to cause some delays to stock deliveries in the early part of the year," the retailer Next said earlier this week, per Bloomberg.
And even though companies aren't experiencing the two-month delays seen during the pandemic, the Red Sea situation doesn't seem to be trending in the right direction, in Schuchart's view.
"It really looks like this is not to be resolved soon," said Schuchart, adding that shipping giant Maersk, among others, is now framing the issue in months and quarters, rather than days or weeks.
As things stand, she said some container tanker rates have spiked up to 173%, and rates are similarly rising for rates on oil and products.
The Panama Canal, meanwhile, is also facing supply-chain headwinds due to drought, the strategist said.
"I think this is really going to start adding to inflationary pressure that the central bank and markets are just not prepared for," Schuchart said.
To be sure, the Hightower expert has taken a contrarian view compared to other market watchers. Metlife's Drew Matus, for example, expects the Fed to cut interest rates six times this year, while Pantheon Macroeconomics' Ian Shepherdson said cuts will be much steeper than anyone expects.