Short On Time… Executive Summary
Well, Polymarket was right again. Kevin Warsh is President Trump’s pick for Fed Chair. Warsh has historically been somewhat of an inflation hawk, at least much more so than the other candidates. This is probably good for the country, but I can’t help but think the number 1 question asked of all these candidates (at least behind closed doors) is if they will push for rate cuts. Seemingly, a “no” answer would have gotten them removed from the pool. Ironically, Trump picked Powell for the job in his first term. My guess, and it is purely a guess, is Warsh will give Trump what he wants initially and then he will go back later and give the country what it needs. After all, once he’s in the job unless he does something truly terrible, the President cannot fire him. Warsh’s term will be 4 years, and he could be reappointed by the next President for another 4 year term.
127 companies are reporting earnings this week. Of the 167 companies that have reported so far (33% of the S&P 500):
Overall, 78% are beating estimates, and those that “beat” are beating by a median of 6%.
Of the 22% missing, those are missing by a median of -5%. On the top line, overall results are beating estimates by a median of 3% and missing by a median of -2%, and 65% of those reporting are beating estimates. So far, earnings are looking good.
The Week On Wall Street
Stocks were mixed last week as investors navigated Q4 corporate results, a widely expected Fed decision, and a handful of economic reports. The Standard & Poor’s 500 Index rose 0.34 percent, while the Nasdaq Composite Index edged down 0.17 percent. The Dow Jones Industrial Average declined 0.42 percent. By contrast, the MSCI EAFE Index, which tracks developed overseas stock markets, rose 1.22 percent.
S&P 500 Touches 7,000
The S&P 500 and Nasdaq advanced early in the week as investors looked ahead to the Fed meeting and corporate results from several large companies. On Wednesday, the Federal Reserve decided to keep interest rates steady, as widely expected. Market reaction was muted, with all three major averages little changed by the close. Disappointing earnings results from one megacap tech firm, announced after the market closed on Wednesday, unsettled investors and dragged the Nasdaq down on Thursday. Stocks opened lower Friday, after the White House nominated Fed veteran Kevin Warsh as the next Fed chair. A warmer-than-expected December wholesale inflation report and concerns about a government shutdown added to bearish investor sentiment as the week wrapped up.
The Fed Holds Steady
The Fed funds rate was held at its current 3.5 percent to 3.75 percent target range at its January meeting. The decision followed three consecutive meetings at which the Fed cut rates; it marked the first time the Fed held rates steady since July. The next Fed meeting is in mid-March. At the post-meeting press conference, Fed Chair Powell did not answer any questions regarding the Justice Department’s investigation.
This Week: Key Economic Data
Monday: Auto Sales. Institute for Supply Management (ISM) Manufacturing Index.
Tuesday: Institute for Supply Management (ISM) Services Index. Job Openings (December)
Wednesday: ADP Employment Report.
Thursday: Weekly Jobless Claims. Atlanta Fed President Raphael Bostic speaks.
Friday: Jobs Report. Consumer Sentiment. Consumer Credit.
This Week: Companies Reporting Earnings
Stay tuned...
