By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- This could be a pivotal week for the markets, with the focus in the middle of the week on the two-day Federal Open Market Committee meeting. The U.S. Federal Reserve (Fed) is widely expected to leave interest rates unchanged, and the market is 50/50 on a cut in March. This means that Fed Chairman Powell’s press conference will garner extra attention and scrutiny. Recent inflation data continues to post positive surprises, although prices remain above the Fed’s 2% target. At the same time, consumer spending remains robust, raising concerns of upward pressure on prices. Wednesday’s announcement will be all about how the Fed views the data. We expect Chairman Powell to walk a fine line, indicating rate cuts are coming but hedging on timing, similar to what he did in December.
- Independent of the Fed meeting, the markets will see more U.S. economic data, including consumer confidence, the Institute for Supply Management manufacturing survey, and what will likely be the most closely watched—the January employment report on Friday. Consumer confidence is expected to continue its recent rebound, while manufacturing is forecast to remain in recessionary territory. The employment situation has been strong, with payrolls expected to have increased by 180,000 and the unemployment rate steady under 4% at 3.8%. The unemployment rate is consistent with solid growth and would likely leave room for the Fed to cut rates in and of itself.
- It’s a huge week of earnings for the tech space, with Apple, Amazon, Microsoft, Alphabet and AMD on the tapes. Troubled aircraft manufacturer, Boeing, also releases earnings. One quarter of the S&P 500 members have reported so far, with 78% posting positive earnings surprises to date and 89% of the 18 (of 80 total) tech names that have reported posting positive surprises.
Three Things to Know
- Currently, the U.S. has a record 8.6 million people who are holding two or more jobs. Since 2020, nearly 2.6 million people have taken on an additional job. Even in the 2008 financial crisis, the worst recession since the Great Depression, this did not happen. (Source: @KobeissiLetter)
- The initial GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2024 is 3.0 percent on January 26. The initial estimate of fourth-quarter real GDP growth, released by the U.S. Bureau of Economic Analysis on January 25, was 3.3%. (Source: The Atlanta Federal Reserve Bank)
- On January 28, 1958, the modern LEGO brick was first patented. LEGO first got its start in Demark when a carpenter named Ole Kirk Christiansen started a small business for wooden toys and household items in 1932. Later, in the 1940s, LEGO made the switch from wood to plastic after the purchase of an injection-molding machine and started producing building blocks in 1949. (Source: Bespoke Investment Group)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.