23 May

Fed Takes a Calmer Stance on Rate Hikes in 2019

WRITTEN BY Sushree Mohanty

Fed’s stance on hiking rates this year

The Fed released the minutes from the May 1–2 FOMC meeting on May 20. After taking an aggressive approach to rate hikes since 2015, the Fed has decided to take a calmer approach in 2019.

Fed Takes a Calmer Stance on Rate Hikes in 2019

The FOMC minutes discussed that Fed officials showed no signs of urgency to change interest rates in 2019 even if the economy continues to strengthen. The minutes also said that the Fed decided to take a patient approach about hiking rates this year even if global economic and financial conditions improve. Earlier this year, during the FOMC’s first meeting on May 1, Fed officials kept the rates unchanged. The minutes also stated how the Fed decided to control short-term rates in an attempt to maximize employment and keep the inflation rate near its target.

Fed’s aggressive rate hikes since 2015

Since December 2015, when the Fed first increased interest rates, there have been nine rate hikes until December 2018. We have seen the labor market strengthening this year with the impressive April Jobs report. Read What April’s Job Numbers Tell Us about the US Economy to learn more. The unemployment rate fell to 3.6% in April. The US added 263,000 jobs in April. Usually, a strengthening labor market and rising inflation put pressure on the Fed to hike interest rates. The fear of rising interest rates made investors panic. The market was volatile at the beginning of 2018, which called for the market sell-off at the beginning of 2018. So far in 2019, inflation remains below the committee’s 2% target, which explains the patient approach to rate hikes.

CNBC stated that the participants in the FOMC meeting mentioned that they think some of the headwinds like Brexit, the global economic outlook, and trade negotiations have faded. However, the FOMC meeting ended three days before the US-China trade talks got ugly. Read US-China Trade Tensions: Why the Consumer Sector Took a Hit to learn more.

The S&P 500 Index (SPY) fell 0.28%, while the tech-heavy NASDAQ Composite Index (QQQ) closed with a loss of 0.45% on May 22, respectively. The Dow Jones Industrial Average closed with a loss of 0.39% on May 22.

Will the strong labor market force the Fed to change its approach? Will the Fed continue to stand its ground on the decided approach? We’ll provide more analysis after the FOMC meeting on June 18–19.

Latest articles

20 Jun

Will Refiners’ Earnings Plunge in 2019?

WRITTEN BY Maitali Ramkumar

Wall Street analysts expect refining firms' earnings to fall in 2019. Delek US Holdings (DK) and Valero Energy’s (VLO) earnings are estimated to fall less than 10% in 2019. However, the EPS of Marathon Petroleum (MPC), HollyFrontier (HFC), and Phillips 66 (PSX) are expected to fall 20%–40% this year.

After remaining tepid for the first four months of the year, gold prices have taken off in a big way. The initial impetus was provided by a tweet made by President Donald Trump on May 5, which revived trade tensions in a big way.

20 Jun

How Are Charter’s Revenues Trending in 2019?

WRITTEN BY Ambrish Shah

In the first quarter, Charter Communications (CHTR) reported total revenues of $11.2 billion—a rise of 5.2% year-over-year and $7 million ahead of the consensus estimate.

This morning before the market opened, Tesla (TSLA) was trading on a negative note despite a sharp rise in index futures. As of 9:10 AM ET, Tesla stock had fallen 1.2% in the pre-market session to $234.74 after Goldman Sachs cut the target price on the company by about 21%.

The US-China trade war has already given a scare to Apple’s (AAPL) investors vis-à-vis the possibility of a 25% tariff on Apple goods being imported from its Chinese facilities. As a result, Apple might be considering shifting its plants out of China.

Yesterday, Greenlane Holdings (GNLN) fell a whopping 17.1%. The stock has now fallen 28% this month, and it hit its all-time low yesterday. Greenlane Holdings listed in April and priced its IPO at $17 per share. However, since the stock surged more than 25% after its listing, it has been a sorry story for Greenlane Holdings investors.