By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- This is a big week for the financial markets with no event more widely anticipated than the Fed’s rate decision on Wednesday. The futures markets are forecasting a 25-basis point increase, which represents the consensus view. Of equal importance and focus will be the Fed statement. Expect the Fed’s guidance of “ongoing increases” to be little changed with the Fed stressing that despite a smaller increase, a pause and pivot isn’t coming soon. A quarter-point increase will raise the target Fed funds rate range to 4.5%-4.75%
- The earnings calendar will feature several widely followed tech heavyweights including Alphabet, Apple, Amazon, and Meta. Other big reports include Merck, Exxon Mobil, and Starbucks. Approximately one quarter of the S&P 500 constituents have reported with 69% posting positive earnings surprises and the aggregate surprise is 2%.
- The economic calendar is highlighted by Friday’s employment report for January. Employment has been one of the bright spots as the economy has slowed and the consensus is for another 185,000 added to non-farm payrolls and the unemployment rate increasing slightly to 3.6%, still very low by historical standards.
Three Things to Know
- For the first time on record, home sales have declined for 11 consecutive months. (Source: Haver)
- According to the Bank of America Global Fund Survey, asset allocators are the most underweight U.S. stocks since October 2005. (Source B of A, Andreas Steno Larsen)
- The World Bank revised its outlook for global GDP growth in 2023 from 3% to 1.7%. It now expects China to grow only 4.3% versus the previous estimate of 5.2%. U.S. GDP growth was slashed from 2.4% to 0.5%. European growth was lowered from 1.5% to 0.1%, and Japan’s GDP growth was revised down to 1% from 1.3%. (Source: Conway Investment Research)
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.