Fed Speakers Put A Damper On Rally

By Scott Poore, AIF, AWMA, APMA
Chief Investment Officer, Eudaimonia Group

Markets were turned upside down over Fed speakers' inconsistent statements last week.  Despite the fact that Fed Chairman Powell stated earlier in the week that "3 rate cuts are our intention" in 2024, Minnesota Fed President Kashkari decided to offer up the notion that the Fed may not cut rates at all this year.  This caused equities to drop more than 1% last Thursday.  Fed futures for June's rate decision, a point most analysts have held for the first rate cut, declined slightly from 56% one week ago to 51% as of this morning.  The debate over inflation will likely heat up this week as both CPI and PPI are expected to have increased slightly in March, and there will plenty of comments by multiple Fed speakers to dissect this week.

Meanwhile, the economic picture remains steady.  Friday's Job Report last week showed a healthy 300,000+ jobs created in March, which stands in stark contrast to other pre-recessionary periods that exhibited job weakness.  Wages also were shown in last week's report to have remained steady and higher than inflation.  Consumer spending data is strong, which supports future corporate earnings growth.  The Big Banks will begin reporting first quarter earnings on Friday, which always makes things interesting.  It's not unreasonable to expect some additional choppiness in trading as Tax Day usually presents weakness as investors sell shares to pay their tax bill to Uncle Sam.  However, that has proven to be temporary in the past.

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