Powell, Earnings, and a Portfolio update
The big focus this week was on the Federal Reserve and Chairman Jerome Powell. The Fed wrapped up their two-day meeting and Powell hosted the press for an update on the Fed’s fight against inflation.
The FOMC statement changed slightly.
The biggest change was to the QT program. The Fed is slowing their pace of US Treasury runoff to $25B. This means when USTreasuries mature, they will not roll them over into new treasury purchases.
The best part of these press conferences is the Q&A and this one did not disappoint.
Right out of the gate there were questions about raising the Fed Funds rate which is kind of crazy when you step back and think about it. An hour prior I snapped a picture of the CME FedWatch tool which had priced in probabilities for a rate hike.
Goldman Sachs got in on the act too.
Nothing in the financial world is known until it is officially denied by Goldman. These guys make a living off of telling you one thing and doing the opposite.
Powell was adamant throughout the press conference that rates aren’t going anywhere anytime soon. Higher for longer continues to be the mantra. It does appear the Fed is beginning to take a closer look at employment data. Questions regarding wage inflation, employment costs, and the jobs report were hot topics. The labor market continues to be historically tight. This was the best take:
Market participants have been excited for Q1 earnings season. The biggest name has been Apple (AAPL). Apple makes up a big part of the SPY and QQQ. They jumped higher after their upbeat earnings report and record buyback announcement but when you dig a little deeper...
it appears that Apple isn’t growing. Tim Cook is shrinking the share count with buybacks pushing the price higher but how long can that last unless Apple begins to grow revenue?