The expectations of an early March interest rate cut by the Federal Reserve still remain uncertain. One strategist believes that market uncertainty has heavy implications for investors.

Simplify Asset Management Chief Strategist Michael Green joins Yahoo Finance Live to discuss market sentiment, stating earnings and labor market prints weigh on investors despite other economic prints coming out "stronger than many people had anticipated."

"It has much less to do with fundamentals, it has much more to do with how with the actual underlying dynamics about [how] trading is done today," Green states. noting “terrible experience” with various sectors in 2024 that fared better in 2023.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Eyek Ntekim

Video Transcript

JOSH LIPTON: And Mike, I want to get your take on-- Julie, we were talking at the beginning of the show about this, about how the narrative seems to have shifted, at least for some, Michael. That we had any number of smart strategists, it wasn't that long ago saying they were betting on 2024. The equity market was going to run higher. And the story was, well, the Fed's going to cut early and this participation is going to broaden out.

As we were chatting, Michael, now markets more skeptical that they're going to cut early, they're going to cut in March. And really we're back to just talking about tech, but the market seems to want to keep moving higher. How do you think about that, Michael? What explains that? Just does that just come down to economic data keeps coming in stronger than expected, is that it?

MICHAEL GREEN: Well, I think the economic data has come in stronger than I think many people had anticipated given kind of expectations for a recession. But we have unquestionably seen things like hiring slow down dramatically, job openings are slowing down dramatically. We are seeing corporate profits that actually in aggregate disappointed for 2023 despite the fact that you had a huge rally. And now, of course, we're expecting end of year 2024 roughly the same level of earnings that we expected at the end of 2022.

So I'd suggest it has much less to do with fundamentals, it has much more to do with the actual underlying dynamics of how trading is done today. We have an incredible supply of short volatility. People are selling call options. When those call options mature, they're ultimately forced to buy back those positions. Dealers are hedging, et cetera.

Those dynamics lead to this kind of slow continuous melt up. And in the background of all of this, we just have the share buybacks coming from those large tech companies that are continually propelling their shares higher while the rest of the market is really struggling in many situations. Looking at 2024, today is the exception with the Russell 2000 up sharply. But year to date, we've had terrible experience across many sectors with many of the stocks that were up strongly in the fourth quarter of 2023 now down anywhere from 10% to 15%