No Rate Cut No Problem
The CME FedWatch Tool has spoken: no rate cut this Wednesday. No problem.
Midcap-US stocks are on fire right now. Although prices at the pump have risen enough to piss people off and become a political issue, much of the energy U.S. businesses use is sourced from natural gas.
Although emerging markets have outperformed U.S. mid YTD, I see the relative insulation as a catalyst for U.S. outperformance – which is much less reliant on crude oil – until headwinds surrounding energy-driven margin pressure subside.
Furthermore, now that the DOJ has dropped their [nonsense] probe into Powell, the path for Warsh’s appointment is clear. Earlier in the month, Powell hinted he may stay at the Fed as a governor, serving out his term in that position that extends into 2028, after his term as Chairman expires until the matter with the DOJ is resolved. Markets dropped on the news.
Markets don’t react well to the unpredictable, and a Chairperson staying on after their term isn’t exactly precedent. Although many Chairpeople have had the opportunity to stay on as governor after their term as Chairperson expires – Powell’s term as governor extends into 2028 – the only chair to serve notable time after their term was Marriner Eccles. Eccles served from 1934 to 1948 as Chairman and stayed on as governor for the three years until 1951. With the unpredictability associated with breaking precedent removed, markets can get a little comfortable and rate market futures a little more dovish even if a cut is on hold.
Earnings Blockbuster
Microsoft. Apple. Amazon. Meta. Alphabet. This is the week. Lock in.
Thankfully, we shouldn’t need to worry much about a stray macro report ruining any solid action or amplifying any negative moves. Of course, Iran remains a wild card. For an in-depth preview of these huge names, tune in to this week’s Charts and Checks, which should debut Tuesday evening.
Key
Macro Economic Events
Corporate Earnings
High Importance
See Note Section Below For Additional Insight
Monday
None scheduled
Tuesday
Spotify (SPOT) | BTO
Robinhood (HOOD) | ATC
Bloom Energy (BE) | ATC
Wednesday
Sofi (SOFI) | BTO
FOMC Interest-Rate Decision | 1400
Fed Chair Powell Press Conference | 1430
Microsoft (MSFT) | ATC
Amazon (AMZN) | ATC
Meta (META) | ATC
Alphabet (GOOG) | ATC
Thursday
Initial jobless claims | Est: 215,000; Prior: 214,000 | 0830
Preliminary GDP Q1 | Est: 2.2%; Prior: 0.5% | 0830
March’s Personal Consumption Expenditures
Personal income | Est: 0.3%; Prior: -0.1% | 0830
Personal spending | Est: 0.9%; Prior: 0.5% | 0830
PCE index | Est: 0.7%; Prior: 0.4% | 0830
PCE (year-over-year) | Est: 3.5%; Prior: 2.8% | 0830
Core PCE index | Est: 0.3%; Prior: 0.4% | 0830
Core PCE (year-over-year) | Est: 3.2%; Prior: 3.0% | 0830
Apple (AAPL)
Reddit (RDDT)
Friday
Manufacturing PMI (April) | Est: No Est. Available; Prior: 55.7 | 0945
ISM manufacturing | Est: 53.2; Prior: 52.7 | 1000
Chevron (CVX)
Exxon (EXOM)
Gorilla With Glasses 