What the Fed Chair Said
It still looks like three rate cuts this year.
In the eye of Fed Chair Jerome Powell, not much has really changed since December.That’s a beautiful thing as far as investors, traders, and speculators are concerned.
“The details are quite dovish,” said Sonu Varghese of Carson Group, “because they’re leaving rate cuts on the table even while projecting slightly higher inflation and more economic growth.”
As Powell put it, though, recent data "haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road to 2 percent.”
As Eddy Elfenbein noted on X, you can spot almost exactly when the FOMC statement dropped yesterday on the one-minute chart of the SPDR S&P Regional Banking ETF $KRE:
https://img.mailinblue.com/4658540/images/content_library/original/65fb62cb40c2a494ec926cde.png
There's still a general consensus around three rate cuts in 2024. The Fed did revise upward its forecast for core Personal Consumption Expenditure Index inflation to 2.6 percent from 2.4 percent.
But it also revised upward its GDP growth forecast from 1.4 percent to 2.1 percent.
Here’s the bottom line, as articulated by Jerome Powell, who is a lawyer and not an academic economist: "We don't really know if this is a bump on the road or something more. We'll have to find out.
"Here are some bumps. Are they more than bumps?"
The Bank of England – once the seat of global power – will make its own policy announcement today.
More important for investors, traders, and speculators will be initial jobless claims for the week ended March 15, a combination of early manufacturing and service sector surveys for this month and leading economic indicators and existing home sales data for February.
Lululemon Athletica $LULU, Nike $NKE, and FedEx $FDX will provide insight on consumers and the broader economy.
My broad guess is that their numbers will support the narrative around a relatively healthy economy, softening a little but not too much.
