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\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

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ADVERTISEMENT
\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

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ADVERTISEMENT
\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n
\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n
\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

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\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

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\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

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ADVERTISEMENT
\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

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ADVERTISEMENT
\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n
\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

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\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

1 2 3 4 … 6

Most Read

Subscribe To Our Newsletter

By subscribing, you agree with our privacy and terms.

Follow The Distributed

Twitter Instagram Youtube LinkedIn Facebook RSS
ADVERTISEMENT
\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

See Related: <\/em><\/strong>The FTX Bankruptcy Crisis: Solana Volatility Is Back But Remains Under Loads Of Doubts Over Its Long-Term Future<\/a><\/p>\n\n\n\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

One notable development is the CBDC prototype platform designed for retail payments. Yang mentioned that this platform could handle the cash flow operation of digital coupons, with transaction speeds reaching 20,000 transactions per second.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The FTX Bankruptcy Crisis: Solana Volatility Is Back But Remains Under Loads Of Doubts Over Its Long-Term Future<\/a><\/p>\n\n\n\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Yang stated that the central bank is experimenting with three scenarios to boost domestic payment efficiency and innovation. There is no set timeline for issuing a CBDC but efforts to enhance and innovativate are ongoing.<\/p>\n\n\n\n

One notable development is the CBDC prototype platform designed for retail payments. Yang mentioned that this platform could handle the cash flow operation of digital coupons, with transaction speeds reaching 20,000 transactions per second.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The FTX Bankruptcy Crisis: Solana Volatility Is Back But Remains Under Loads Of Doubts Over Its Long-Term Future<\/a><\/p>\n\n\n\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

President Yang Jinlong highlighted that being the first to launch a CBDC does not guarantee success, as countries that have already issued or tested CBDCs have not achieved the expected outcomes.<\/p>\n\n\n\n

Yang stated that the central bank is experimenting with three scenarios to boost domestic payment efficiency and innovation. There is no set timeline for issuing a CBDC but efforts to enhance and innovativate are ongoing.<\/p>\n\n\n\n

One notable development is the CBDC prototype platform designed for retail payments. Yang mentioned that this platform could handle the cash flow operation of digital coupons, with transaction speeds reaching 20,000 transactions per second.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The FTX Bankruptcy Crisis: Solana Volatility Is Back But Remains Under Loads Of Doubts Over Its Long-Term Future<\/a><\/p>\n\n\n\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

The President of the Central Bank of the Republic of China shared <\/a>that developing a central bank digital currency (CBDC) is not a race. Instead, the central bank should prioritize steady progress over speed.<\/p>\n\n\n\n

President Yang Jinlong highlighted that being the first to launch a CBDC does not guarantee success, as countries that have already issued or tested CBDCs have not achieved the expected outcomes.<\/p>\n\n\n\n

Yang stated that the central bank is experimenting with three scenarios to boost domestic payment efficiency and innovation. There is no set timeline for issuing a CBDC but efforts to enhance and innovativate are ongoing.<\/p>\n\n\n\n

One notable development is the CBDC prototype platform designed for retail payments. Yang mentioned that this platform could handle the cash flow operation of digital coupons, with transaction speeds reaching 20,000 transactions per second.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The FTX Bankruptcy Crisis: Solana Volatility Is Back But Remains Under Loads Of Doubts Over Its Long-Term Future<\/a><\/p>\n\n\n\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

The Nasdaq Composite rose 1% to 18,608.2 intraday, while the S&P 500 gained 0.7% to reach 5,614.8. The Dow Jones Industrial Average advanced 0.5%, climbing to 39,479.8 while it is important to mention that the technology and materials sectors led the gains, with financials being the only sector to decline. Following the progress of Wall Street's main indexes seen in the first half of the year, investors are still optimistic about the prospect of another robust period ahead. This optimism is rooted in the anticipation that a decelerating economy will result in a gentle landing rather than a full-scale recession.<\/p>\n","post_title":"Wall Street's Main Indexes Advanced After Fed Chair Powell's Remarks","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-streets-main-indexes-advanced-after-fed-chair-powells-remarks","to_ping":"","pinged":"","post_modified":"2024-07-15 03:48:49","post_modified_gmt":"2024-07-14 17:48:49","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17776","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17736,"post_author":"15","post_date":"2024-07-09 21:59:22","post_date_gmt":"2024-07-09 11:59:22","post_content":"\n

The President of the Central Bank of the Republic of China shared <\/a>that developing a central bank digital currency (CBDC) is not a race. Instead, the central bank should prioritize steady progress over speed.<\/p>\n\n\n\n

President Yang Jinlong highlighted that being the first to launch a CBDC does not guarantee success, as countries that have already issued or tested CBDCs have not achieved the expected outcomes.<\/p>\n\n\n\n

Yang stated that the central bank is experimenting with three scenarios to boost domestic payment efficiency and innovation. There is no set timeline for issuing a CBDC but efforts to enhance and innovativate are ongoing.<\/p>\n\n\n\n

One notable development is the CBDC prototype platform designed for retail payments. Yang mentioned that this platform could handle the cash flow operation of digital coupons, with transaction speeds reaching 20,000 transactions per second.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The FTX Bankruptcy Crisis: Solana Volatility Is Back But Remains Under Loads Of Doubts Over Its Long-Term Future<\/a><\/p>\n\n\n\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Federal Reserve Chair Jerome Powell also said this Wednesday that the central bank is not just focused on inflation and that policymakers closely watch the situation in the U.S. labor market. He concluded that the U.S. is still on track for a so-called soft landing, where the Fed's inflation target is met without a significant increase in the unemployment rate. This outcome seemed improbable when inflation reached a 40-year high in 2022.<\/p>\n\n\n\n

The Nasdaq Composite rose 1% to 18,608.2 intraday, while the S&P 500 gained 0.7% to reach 5,614.8. The Dow Jones Industrial Average advanced 0.5%, climbing to 39,479.8 while it is important to mention that the technology and materials sectors led the gains, with financials being the only sector to decline. Following the progress of Wall Street's main indexes seen in the first half of the year, investors are still optimistic about the prospect of another robust period ahead. This optimism is rooted in the anticipation that a decelerating economy will result in a gentle landing rather than a full-scale recession.<\/p>\n","post_title":"Wall Street's Main Indexes Advanced After Fed Chair Powell's Remarks","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-streets-main-indexes-advanced-after-fed-chair-powells-remarks","to_ping":"","pinged":"","post_modified":"2024-07-15 03:48:49","post_modified_gmt":"2024-07-14 17:48:49","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17776","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17736,"post_author":"15","post_date":"2024-07-09 21:59:22","post_date_gmt":"2024-07-09 11:59:22","post_content":"\n

The President of the Central Bank of the Republic of China shared <\/a>that developing a central bank digital currency (CBDC) is not a race. Instead, the central bank should prioritize steady progress over speed.<\/p>\n\n\n\n

President Yang Jinlong highlighted that being the first to launch a CBDC does not guarantee success, as countries that have already issued or tested CBDCs have not achieved the expected outcomes.<\/p>\n\n\n\n

Yang stated that the central bank is experimenting with three scenarios to boost domestic payment efficiency and innovation. There is no set timeline for issuing a CBDC but efforts to enhance and innovativate are ongoing.<\/p>\n\n\n\n

One notable development is the CBDC prototype platform designed for retail payments. Yang mentioned that this platform could handle the cash flow operation of digital coupons, with transaction speeds reaching 20,000 transactions per second.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The FTX Bankruptcy Crisis: Solana Volatility Is Back But Remains Under Loads Of Doubts Over Its Long-Term Future<\/a><\/p>\n\n\n\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Central Bank And Inflation<\/h2>\n\n\n\n

Federal Reserve Chair Jerome Powell also said this Wednesday that the central bank is not just focused on inflation and that policymakers closely watch the situation in the U.S. labor market. He concluded that the U.S. is still on track for a so-called soft landing, where the Fed's inflation target is met without a significant increase in the unemployment rate. This outcome seemed improbable when inflation reached a 40-year high in 2022.<\/p>\n\n\n\n

The Nasdaq Composite rose 1% to 18,608.2 intraday, while the S&P 500 gained 0.7% to reach 5,614.8. The Dow Jones Industrial Average advanced 0.5%, climbing to 39,479.8 while it is important to mention that the technology and materials sectors led the gains, with financials being the only sector to decline. Following the progress of Wall Street's main indexes seen in the first half of the year, investors are still optimistic about the prospect of another robust period ahead. This optimism is rooted in the anticipation that a decelerating economy will result in a gentle landing rather than a full-scale recession.<\/p>\n","post_title":"Wall Street's Main Indexes Advanced After Fed Chair Powell's Remarks","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-streets-main-indexes-advanced-after-fed-chair-powells-remarks","to_ping":"","pinged":"","post_modified":"2024-07-15 03:48:49","post_modified_gmt":"2024-07-14 17:48:49","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17776","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17736,"post_author":"15","post_date":"2024-07-09 21:59:22","post_date_gmt":"2024-07-09 11:59:22","post_content":"\n

The President of the Central Bank of the Republic of China shared <\/a>that developing a central bank digital currency (CBDC) is not a race. Instead, the central bank should prioritize steady progress over speed.<\/p>\n\n\n\n

President Yang Jinlong highlighted that being the first to launch a CBDC does not guarantee success, as countries that have already issued or tested CBDCs have not achieved the expected outcomes.<\/p>\n\n\n\n

Yang stated that the central bank is experimenting with three scenarios to boost domestic payment efficiency and innovation. There is no set timeline for issuing a CBDC but efforts to enhance and innovativate are ongoing.<\/p>\n\n\n\n

One notable development is the CBDC prototype platform designed for retail payments. Yang mentioned that this platform could handle the cash flow operation of digital coupons, with transaction speeds reaching 20,000 transactions per second.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The FTX Bankruptcy Crisis: Solana Volatility Is Back But Remains Under Loads Of Doubts Over Its Long-Term Future<\/a><\/p>\n\n\n\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

See Related:<\/em><\/strong> U.S. Central Bank May Need To Keep Interest Rates Higher For Longer. What To Expect In The Upcoming Days?<\/a><\/p>\n\n\n\n

Central Bank And Inflation<\/h2>\n\n\n\n

Federal Reserve Chair Jerome Powell also said this Wednesday that the central bank is not just focused on inflation and that policymakers closely watch the situation in the U.S. labor market. He concluded that the U.S. is still on track for a so-called soft landing, where the Fed's inflation target is met without a significant increase in the unemployment rate. This outcome seemed improbable when inflation reached a 40-year high in 2022.<\/p>\n\n\n\n

The Nasdaq Composite rose 1% to 18,608.2 intraday, while the S&P 500 gained 0.7% to reach 5,614.8. The Dow Jones Industrial Average advanced 0.5%, climbing to 39,479.8 while it is important to mention that the technology and materials sectors led the gains, with financials being the only sector to decline. Following the progress of Wall Street's main indexes seen in the first half of the year, investors are still optimistic about the prospect of another robust period ahead. This optimism is rooted in the anticipation that a decelerating economy will result in a gentle landing rather than a full-scale recession.<\/p>\n","post_title":"Wall Street's Main Indexes Advanced After Fed Chair Powell's Remarks","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-streets-main-indexes-advanced-after-fed-chair-powells-remarks","to_ping":"","pinged":"","post_modified":"2024-07-15 03:48:49","post_modified_gmt":"2024-07-14 17:48:49","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17776","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17736,"post_author":"15","post_date":"2024-07-09 21:59:22","post_date_gmt":"2024-07-09 11:59:22","post_content":"\n

The President of the Central Bank of the Republic of China shared <\/a>that developing a central bank digital currency (CBDC) is not a race. Instead, the central bank should prioritize steady progress over speed.<\/p>\n\n\n\n

President Yang Jinlong highlighted that being the first to launch a CBDC does not guarantee success, as countries that have already issued or tested CBDCs have not achieved the expected outcomes.<\/p>\n\n\n\n

Yang stated that the central bank is experimenting with three scenarios to boost domestic payment efficiency and innovation. There is no set timeline for issuing a CBDC but efforts to enhance and innovativate are ongoing.<\/p>\n\n\n\n

One notable development is the CBDC prototype platform designed for retail payments. Yang mentioned that this platform could handle the cash flow operation of digital coupons, with transaction speeds reaching 20,000 transactions per second.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The FTX Bankruptcy Crisis: Solana Volatility Is Back But Remains Under Loads Of Doubts Over Its Long-Term Future<\/a><\/p>\n\n\n\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

\"There's still three CPI reports that we're slated to get between now and September, so it's hard to say conclusively that he's leaning towards September or if it's going to be pushed off. My expectation for CPI is that it will continue to see the easing trend with respect to inflation. But I don't think the decline we're going to see for June is going to be as strong as what we saw in May.\"<\/em><\/p>\n\n\n\n

See Related:<\/em><\/strong> U.S. Central Bank May Need To Keep Interest Rates Higher For Longer. What To Expect In The Upcoming Days?<\/a><\/p>\n\n\n\n

Central Bank And Inflation<\/h2>\n\n\n\n

Federal Reserve Chair Jerome Powell also said this Wednesday that the central bank is not just focused on inflation and that policymakers closely watch the situation in the U.S. labor market. He concluded that the U.S. is still on track for a so-called soft landing, where the Fed's inflation target is met without a significant increase in the unemployment rate. This outcome seemed improbable when inflation reached a 40-year high in 2022.<\/p>\n\n\n\n

The Nasdaq Composite rose 1% to 18,608.2 intraday, while the S&P 500 gained 0.7% to reach 5,614.8. The Dow Jones Industrial Average advanced 0.5%, climbing to 39,479.8 while it is important to mention that the technology and materials sectors led the gains, with financials being the only sector to decline. Following the progress of Wall Street's main indexes seen in the first half of the year, investors are still optimistic about the prospect of another robust period ahead. This optimism is rooted in the anticipation that a decelerating economy will result in a gentle landing rather than a full-scale recession.<\/p>\n","post_title":"Wall Street's Main Indexes Advanced After Fed Chair Powell's Remarks","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-streets-main-indexes-advanced-after-fed-chair-powells-remarks","to_ping":"","pinged":"","post_modified":"2024-07-15 03:48:49","post_modified_gmt":"2024-07-14 17:48:49","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17776","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17736,"post_author":"15","post_date":"2024-07-09 21:59:22","post_date_gmt":"2024-07-09 11:59:22","post_content":"\n

The President of the Central Bank of the Republic of China shared <\/a>that developing a central bank digital currency (CBDC) is not a race. Instead, the central bank should prioritize steady progress over speed.<\/p>\n\n\n\n

President Yang Jinlong highlighted that being the first to launch a CBDC does not guarantee success, as countries that have already issued or tested CBDCs have not achieved the expected outcomes.<\/p>\n\n\n\n

Yang stated that the central bank is experimenting with three scenarios to boost domestic payment efficiency and innovation. There is no set timeline for issuing a CBDC but efforts to enhance and innovativate are ongoing.<\/p>\n\n\n\n

One notable development is the CBDC prototype platform designed for retail payments. Yang mentioned that this platform could handle the cash flow operation of digital coupons, with transaction speeds reaching 20,000 transactions per second.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The FTX Bankruptcy Crisis: Solana Volatility Is Back But Remains Under Loads Of Doubts Over Its Long-Term Future<\/a><\/p>\n\n\n\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

The Consumer Price Index (CPI) data will be released on July 11 and if the inflation figures are lower than expected, it could signal an immediate interest rate cut or suggest that the Federal Reserve will implement additional rate cuts in the near future. Market bets on a 25-basis-point rate cut from the Fed in September were at 74%, up from around 70% on Tuesday and 45% a month ago, according to CME's FedWatch. Raymond James Chief Market Strategist Matthew Orton said<\/a> in an interview with Reuters:<\/p>\n\n\n\n

\"There's still three CPI reports that we're slated to get between now and September, so it's hard to say conclusively that he's leaning towards September or if it's going to be pushed off. My expectation for CPI is that it will continue to see the easing trend with respect to inflation. But I don't think the decline we're going to see for June is going to be as strong as what we saw in May.\"<\/em><\/p>\n\n\n\n

See Related:<\/em><\/strong> U.S. Central Bank May Need To Keep Interest Rates Higher For Longer. What To Expect In The Upcoming Days?<\/a><\/p>\n\n\n\n

Central Bank And Inflation<\/h2>\n\n\n\n

Federal Reserve Chair Jerome Powell also said this Wednesday that the central bank is not just focused on inflation and that policymakers closely watch the situation in the U.S. labor market. He concluded that the U.S. is still on track for a so-called soft landing, where the Fed's inflation target is met without a significant increase in the unemployment rate. This outcome seemed improbable when inflation reached a 40-year high in 2022.<\/p>\n\n\n\n

The Nasdaq Composite rose 1% to 18,608.2 intraday, while the S&P 500 gained 0.7% to reach 5,614.8. The Dow Jones Industrial Average advanced 0.5%, climbing to 39,479.8 while it is important to mention that the technology and materials sectors led the gains, with financials being the only sector to decline. Following the progress of Wall Street's main indexes seen in the first half of the year, investors are still optimistic about the prospect of another robust period ahead. This optimism is rooted in the anticipation that a decelerating economy will result in a gentle landing rather than a full-scale recession.<\/p>\n","post_title":"Wall Street's Main Indexes Advanced After Fed Chair Powell's Remarks","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-streets-main-indexes-advanced-after-fed-chair-powells-remarks","to_ping":"","pinged":"","post_modified":"2024-07-15 03:48:49","post_modified_gmt":"2024-07-14 17:48:49","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17776","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17736,"post_author":"15","post_date":"2024-07-09 21:59:22","post_date_gmt":"2024-07-09 11:59:22","post_content":"\n

The President of the Central Bank of the Republic of China shared <\/a>that developing a central bank digital currency (CBDC) is not a race. Instead, the central bank should prioritize steady progress over speed.<\/p>\n\n\n\n

President Yang Jinlong highlighted that being the first to launch a CBDC does not guarantee success, as countries that have already issued or tested CBDCs have not achieved the expected outcomes.<\/p>\n\n\n\n

Yang stated that the central bank is experimenting with three scenarios to boost domestic payment efficiency and innovation. There is no set timeline for issuing a CBDC but efforts to enhance and innovativate are ongoing.<\/p>\n\n\n\n

One notable development is the CBDC prototype platform designed for retail payments. Yang mentioned that this platform could handle the cash flow operation of digital coupons, with transaction speeds reaching 20,000 transactions per second.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The FTX Bankruptcy Crisis: Solana Volatility Is Back But Remains Under Loads Of Doubts Over Its Long-Term Future<\/a><\/p>\n\n\n\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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\n

Wall Street's main indexes advanced this Wednesday after Federal Reserve Chair Jerome Powell said that inflationary pressures were likely easing. Federal Reserve Chair Jerome Powell reiterated remarks submitted to the Senate Banking Committee Tuesday, that recent inflation data have shown \"modest further progress,\" and that \"more good data\" would strengthen policymakers' confidence that inflation was returning to their 2% target.<\/p>\n\n\n\n

The Consumer Price Index (CPI) data will be released on July 11 and if the inflation figures are lower than expected, it could signal an immediate interest rate cut or suggest that the Federal Reserve will implement additional rate cuts in the near future. Market bets on a 25-basis-point rate cut from the Fed in September were at 74%, up from around 70% on Tuesday and 45% a month ago, according to CME's FedWatch. Raymond James Chief Market Strategist Matthew Orton said<\/a> in an interview with Reuters:<\/p>\n\n\n\n

\"There's still three CPI reports that we're slated to get between now and September, so it's hard to say conclusively that he's leaning towards September or if it's going to be pushed off. My expectation for CPI is that it will continue to see the easing trend with respect to inflation. But I don't think the decline we're going to see for June is going to be as strong as what we saw in May.\"<\/em><\/p>\n\n\n\n

See Related:<\/em><\/strong> U.S. Central Bank May Need To Keep Interest Rates Higher For Longer. What To Expect In The Upcoming Days?<\/a><\/p>\n\n\n\n

Central Bank And Inflation<\/h2>\n\n\n\n

Federal Reserve Chair Jerome Powell also said this Wednesday that the central bank is not just focused on inflation and that policymakers closely watch the situation in the U.S. labor market. He concluded that the U.S. is still on track for a so-called soft landing, where the Fed's inflation target is met without a significant increase in the unemployment rate. This outcome seemed improbable when inflation reached a 40-year high in 2022.<\/p>\n\n\n\n

The Nasdaq Composite rose 1% to 18,608.2 intraday, while the S&P 500 gained 0.7% to reach 5,614.8. The Dow Jones Industrial Average advanced 0.5%, climbing to 39,479.8 while it is important to mention that the technology and materials sectors led the gains, with financials being the only sector to decline. Following the progress of Wall Street's main indexes seen in the first half of the year, investors are still optimistic about the prospect of another robust period ahead. This optimism is rooted in the anticipation that a decelerating economy will result in a gentle landing rather than a full-scale recession.<\/p>\n","post_title":"Wall Street's Main Indexes Advanced After Fed Chair Powell's Remarks","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-streets-main-indexes-advanced-after-fed-chair-powells-remarks","to_ping":"","pinged":"","post_modified":"2024-07-15 03:48:49","post_modified_gmt":"2024-07-14 17:48:49","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17776","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17736,"post_author":"15","post_date":"2024-07-09 21:59:22","post_date_gmt":"2024-07-09 11:59:22","post_content":"\n

The President of the Central Bank of the Republic of China shared <\/a>that developing a central bank digital currency (CBDC) is not a race. Instead, the central bank should prioritize steady progress over speed.<\/p>\n\n\n\n

President Yang Jinlong highlighted that being the first to launch a CBDC does not guarantee success, as countries that have already issued or tested CBDCs have not achieved the expected outcomes.<\/p>\n\n\n\n

Yang stated that the central bank is experimenting with three scenarios to boost domestic payment efficiency and innovation. There is no set timeline for issuing a CBDC but efforts to enhance and innovativate are ongoing.<\/p>\n\n\n\n

One notable development is the CBDC prototype platform designed for retail payments. Yang mentioned that this platform could handle the cash flow operation of digital coupons, with transaction speeds reaching 20,000 transactions per second.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The FTX Bankruptcy Crisis: Solana Volatility Is Back But Remains Under Loads Of Doubts Over Its Long-Term Future<\/a><\/p>\n\n\n\n

Yang reiterated that Taiwan\u2019s cautious approach to issuing a CBDC is meant to meet public digital payment needs and align with government digital policy goals, ensuring significant benefits.<\/p>\n\n\n\n

In March, the Financial Supervisory Commission announced plans to propose new digital asset regulations for Taiwan by September 2024, aiming to create more effective regulations for digital asset markets and ensure investor safety.<\/p>\n\n\n\n

North Carolina Vetoed The CBDC Ban Bill<\/h2>\n\n\n\n

North Carolina Governor Roy Cooper has rejected <\/a>a bill banning the state from using a US Federal Reserve-issued CBDC. The bill had strong support from the state\u2019s House of Representatives and Senate with a vote of 109-4 and 39-5 respectively.<\/p>\n\n\n\n

Governor Cooper is criticized for deciding without putting \u201cpartisan politics aside\u201d. The bill is said to benefit all North Carolina residents, but the Governor believes that the bill was too \u201cpremature, vague, and reactionary\u201d to be signed into law.<\/p>\n\n\n\n

Since the vote was more than three-fifths majority in both chambers, the North Carolina legislators could override Governor Cooper's veto. <\/p>\n","post_title":"Taiwan's Central Bank Focuses On Slow And Steady Development Of CBDC","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"taiwans-central-bank-focuses-on-slow-and-steady-development-of-cbdc","to_ping":"","pinged":"","post_modified":"2024-07-09 21:59:28","post_modified_gmt":"2024-07-09 11:59:28","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17736","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17353,"post_author":"14","post_date":"2024-06-21 19:51:27","post_date_gmt":"2024-06-21 09:51:27","post_content":"\n

Wall Street's main indexes opened mixed on Tuesday as investors wait for an important inflation report that could influence the Federal Reserve's decision on interest rate cuts. The consumer price index (CPI) is set to be released before the market opens on Wednesday, and investors will be closely monitoring these figures, along with the Federal Reserve's policy statement scheduled for Wednesday afternoon.<\/p>\n\n\n\n

The consumer price index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services and it is a key indicator of inflation, which affects the purchasing power of money. According to economists surveyed by Reuters, the headline consumer price index (CPI) is projected to rise by 0.1% in May, down from the 0.3% increase observed in the previous month. It will be the second gauge of U.S. inflation in June, following Friday's hotter-than-expected wage growth numbers.<\/p>\n\n\n\n

Although the U.S. central bank is widely anticipated to maintain its benchmark overnight interest rate in the 5.25%-5.50% range for the seventh consecutive meeting, investors will be keenly watching the statement and comments from Chair Jerome Powell for any hints about future plans.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Investors Wait For A Crucial Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve<\/a><\/p>\n\n\n\n

Federal Reserve Rate Cut And Election<\/h2>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), predicts that there will be one Federal Reserve rate cut after the election, likely in December. However, he also suggests that a spike in unemployment this summer could make a September cut possible. Sam Stovall, chief investment strategist of CFRA Research in New York, added<\/a>:<\/p>\n\n\n\n

\"Investors are playing it safe but we will continue to see all-time highs, and you don\u2019t want to make emotional decisions. The S&P could set up another all-time high, CPI could come in weaker than expected, and the Fed could sound optimistic that at least one rate cut could occur before year-end.\"<\/em><\/p>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings.<\/p>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. Investors are currently navigating a complex narrative: on the one hand, the U.S. economy remains resilient, but on the other hand, inflation and rising interest rates pose potential challenges for the stock market.<\/p>\n","post_title":"Investors Wait For An Important Inflation Report That Could Influence On Decision For Interest Rate Cuts From The Federal Reserve. What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"investors-wait-for-an-important-inflation-report-that-could-influence-on-decision-for-interest-rate-cuts-from-the-federal-reserve-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-21 19:51:32","post_modified_gmt":"2024-06-21 09:51:32","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17353","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17450,"post_author":"14","post_date":"2024-06-20 22:33:19","post_date_gmt":"2024-06-20 12:33:19","post_content":"\n

The S&P 500 and the Nasdaq Composite closed at new record highs on Tuesday as investors digested the latest economic data and mixed comments from Federal Reserve officials. The S&P 500 index rose 0.3% to 5,487; the technology-heavy Nasdaq ticked higher to 17,862, while the Dow Jones Industrial Average advanced 0.2% and closed at 38,834 points.<\/p>\n\n\n\n

\"\"
The tech-heavy index Nasdaq closed at record highs this Tuesday<\/em><\/figcaption><\/figure>\n\n\n\n

Financials and technology companies were the top-performing sectors, while communication services experienced the largest decline. US stock markets are closed this Wednesday for Juneteenth but according to Sam Stovall, chief investment strategist of CFRA Research in New York, even though investors are playing it safe, we will continue to see all-time highs in the upcoming days.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The S&amp;P 500 And Nasdaq Indexes Reached Record Highs This Wednesday. Could A Pullback Be Imminent?<\/a><\/p>\n\n\n\n

Earnings Growth And US Stocks <\/h2>\n\n\n\n

Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions. The US economy remains resilient and regarding the latest economic news, retail sales in the US edged up 0.1% last month following April's downwardly revised 0.2% decline.<\/p>\n\n\n\n

Another positive information is that US industrial production rose more than expected in May as manufacturing output returned to growth after two months of declines. However, Boston Fed President Susan Collins said this week that even though recent inflation data has been \"encouraging,\" the process of lowering inflation may take longer than expected. Boston Fed President Susan Collins said :<\/p>\n\n\n\n

\"The data suggest an economy with demand and supply coming into better balance, as required to restore price stability. However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.\"<\/em><\/p>\n\n\n\n

Joseph Kalish, chief global macro strategist at Ned Davis Research (NDR), forecasts that there will be only one Federal Reserve rate cut this year, which certainly poses a risk for the US economy. This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices.<\/p>\n","post_title":"The S&P 500 And Nasdaq Indexes Closed At Record Highs This Tuesday.\u00a0 What To Expect In The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-sp-500-and-nasdaq-indexes-closed-at-record-highs-this-tuesday-what-to-expect-in-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-06-20 22:35:56","post_modified_gmt":"2024-06-20 12:35:56","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17450","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17323,"post_author":"18","post_date":"2024-06-19 23:12:43","post_date_gmt":"2024-06-19 13:12:43","post_content":"\n

In a move that risks undermining the dollar's global dominance, the United States is chipping away at the pillars that have long supported the currency's reserve status, according to a Reuters report. The latest blows come from powerful Americans questioning the rule of law following the conviction of former President Donald Trump.<\/p>\n\n\n\n

The attacks on the legal system in the aftermath of Trump's conviction, combined with the country's increasing use of sanctions as a punitive foreign policy tool and its mounting debt burden, have effectively dared the rest of the world to find an alternative to the dollar. However, despite growing consternation at home and abroad over the consequences of U.S. hubris, no credible alternative has emerged, and the world seems to have partly itself to blame.<\/p>\n\n\n\n

In Asia, for instance, people are urgently seeking ways to reduce their U.S. exposure and boost non-dollar trade flows but attempts to build such systems have been slow-going or haven't gained traction. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions have made other options less attractive than U.S. assets, even if their appeal has diminished.<\/p>\n\n\n\n

See Related: <\/em><\/strong>Survey Shows Rising Interest In Crypto Ahead Of 2024 Election, Says Grayscale<\/a><\/p>\n\n\n\n

Central Bank Reserve Managers' Plan<\/h2>\n\n\n\n

A recent survey<\/a> shows that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months due to the rise in global geopolitical tensions and the need for liquidity, drawing them to the currency's safe-haven status.<\/p>\n\n\n\n

At its core, the dollar's dominant role in the world draws from the United States' democratic principles, supported by the massive size of its economy, the depth of its markets, the strength of its institutions, and the rule of law. However, the increasing messiness of the U.S. political landscape is testing some of the underpinnings of the dollar's global appeal.<\/p>\n\n\n\n

Attacks on the U.S. legal system have increased after Trump's conviction, with Florida Governor Ron DeSantis calling it a \"kangaroo court.\" A major investor based in Asia expressed concerns about potential threats to U.S. institutions, noting that any debasing of the Federal Reserve's authority could affect the dollar's credibility and lead to a double-digit depreciation of the currency.<\/p>\n\n\n\n

As the world watches the legal uncertainties unfold in the United States, the implications for the dollar's global dominance remain uncertain. While no credible alternative has emerged yet, the growing doubts over the strength of U.S. institutions and the rule of law could erode the currency's appeal in the long run.<\/p>\n\n\n\n

The U.S. faces a delicate balancing act between maintaining its economic and financial might while upholding the democratic principles and legal integrity that have underpinned the dollar's reserve status. As the world's financial center grapples with these challenges, the search for alternative currencies or systems may intensify, potentially reshaping the global financial landscape in unexpected ways.<\/p>\n","post_title":"United States Legal Turmoil Raises Concerns Over Dollar's Global Supremacy","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"united-states-legal-turmoil-raises-concerns-over-dollars-global-supremacy","to_ping":"","pinged":"","post_modified":"2024-06-19 23:12:47","post_modified_gmt":"2024-06-19 13:12:47","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17323","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":17013,"post_author":"18","post_date":"2024-05-27 09:00:41","post_date_gmt":"2024-05-26 23:00:41","post_content":"\n

Federal Reserve policymakers are advocating a patient approach, emphasizing the need to see several more months of encouraging inflation data before considering interest rate cuts, according to remarks made on Tuesday. This stance reinforces the central bank's commitment to ensuring that inflation is firmly on track toward the 2% target before easing its monetary policy stance.<\/p>\n\n\n\n

As reported by Reuters, Fed Governor Christopher Waller stated that in the absence of a significant weakening in the labor market, he needs to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy. His comments were delivered during an event at the Peterson Institute for International Economics in Washington.<\/p>\n\n\n\n

While acknowledging the reassuring nature of the latest inflation readings, Waller dismissed speculation about the need for further rate hikes, deeming the probability very low. He underscored the importance of avoiding abrupt policy shifts, stating that the Fed does not want to go off a cliff, emphasizing that as the critical thing.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration<\/a><\/p>\n\n\n\n

Benchmark Interest Rate<\/h2>\n\n\n\n

The Fed has maintained its benchmark interest rate within the 5.25%-5.50% range since July of the previous year. Despite three consecutive months of higher-than-anticipated inflation figures from January to March, the central bank is cautiously optimistic about recent signs of a cooling labor market and progress toward lowering inflation to the desired level.<\/p>\n\n\n\n

This cautious approach aligns with the views of market analysts. Krishna Guha, Vice Chairman at Evercore ISI, interpreted Waller's remarks as indicating a willingness to consider rate cuts in September, contingent upon a more definitive downward trend in inflation over the coming months.<\/p>\n\n\n\n

The Federal Reserve's<\/a> patient stance reflects a data-driven approach to monetary policy decisions. By emphasizing the need for sustained progress on inflation before implementing rate cuts, the central bank aims to strike a balance between supporting economic growth and maintaining price stability.<\/p>\n\n\n\n

As the Fed continues to monitor economic indicators closely, the timing of the initial rate cut will hinge on the trajectory of inflation and labor market dynamics in the months ahead. This prudent strategy underscores the central bank's commitment to achieving its inflation target while avoiding potential disruptions to the economy.<\/p>\n","post_title":"Federal Reserves Seeks More Inflation Cooling Before Easing Rates","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"federal-reserves-seeks-more-inflation-cooling-before-easing-rates","to_ping":"","pinged":"","post_modified":"2024-05-27 09:00:45","post_modified_gmt":"2024-05-26 23:00:45","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=17013","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16908,"post_author":"14","post_date":"2024-05-19 23:56:24","post_date_gmt":"2024-05-19 13:56:24","post_content":"\n

Federal Reserve Chair Jerome Powell said this Tuesday that the US Central Bank is expected to maintain its benchmark lending rate at an elevated level for an extended duration. From March 2022 to July 2023, the Federal Reserve raised interest rates by 525 basis points to curb inflation and since then, it has held rates steady, with its most recent decision to pause occurring earlier this month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

One of the reasons behind Federal Reserve Chair Jerome Powell's statement is the fact that the latest data that was published this week showed that the US producer price index rose 0.5% in April following a downwardly revised 0.1% decline in March, beating the 0.3% gain expected in a survey compiled by Bloomberg. PPI was up 2.2% year-over-year in April, while core PPI rose by 2.4% year-over-year, both surpassing their March rates of 1.8% and 2.1%<\/p>\n\n\n\n

Federal Reserve Chair Jerome Powell also added that policymakers aren't anticipating further interest rate hikes beyond current levels, yet he cautioned that achieving the 2% target will be a challenging journey with bumps along the way. Tom Porcelli, chief economist at PGIM Fixed Income, suggests that if the Federal Reserve refrains from reducing interest rates this year, it is probable that they will implement five to six rate cuts in 2025.<\/p>\n\n\n\n

See Related: <\/em><\/strong>The first-quarter U.S. Earnings Season Showed Further Improvements. What To Expect From The Upcoming Days?<\/a><\/p>\n\n\n\n

Federal Reserve Interest Rates<\/h2>\n\n\n\n

Even amidst reports of persistent inflation and fears of prolonged higher interest rates by the Federal Reserve, stocks have remained relatively stable in recent weeks. Wall Street strategists credit this resilience to an unexpectedly robust set of first-quarter earnings. Robust earnings growth has fueled the US stocks and positive Q1 earnings results provide further support to the ongoing bullish view, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

However, some analysts believe the U.S. economy is starting to see signs of a slowdown and according to them, many companies could face liquidity problems in the upcoming months. High rates encourage saving over spending and make the debt more costly, and companies that have a bigger credit or other loans with variable interest rates could be in a difficult situation. Higher borrowing costs can hurt corporate profits and discourage businesses from borrowing to invest in new projects, which can hurt economic activity and job creation.<\/p>\n\n\n\n

This situation could negatively affect stock prices, and it is also important to mention that high interest rates make fixed-income investments, such as bonds, more attractive compared to stocks. As a result, investors may shift their money away from stocks, leading to a decrease in stock prices. Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"The Federal Reserve Is Expected To Maintain Its Benchmark Lending Rate At An Elevated Level For An Extended Duration","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-federal-reserve-is-expected-to-maintain-its-benchmark-lending-rate-at-an-elevated-level-for-an-extended-duration","to_ping":"","pinged":"","post_modified":"2024-05-19 23:56:29","post_modified_gmt":"2024-05-19 13:56:29","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16908","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16825,"post_author":"14","post_date":"2024-05-13 17:33:44","post_date_gmt":"2024-05-13 07:33:44","post_content":"\n

Despite reports of persistent inflation and concerns that the Federal Reserve <\/a>may maintain higher interest rates for longer than anticipated, stocks have largely held steady in recent weeks. Wall Street strategists attribute this resilience to a stronger-than-expected set of first-quarter earnings.<\/p>\n\n\n\n

As the first-quarter U.S. earnings season nears its end, projected earnings growth for S&P 500 companies continues to rise. Overall S&P 500 earnings growth is now seen at 7.8% year-over-year, based on results from 424 of the S&P 500 companies as of Tuesday and estimates for the rest, according to LSEG.<\/p>\n\n\n\n

More than 78% of companies beat Wall Street earnings expectations and among the biggest improvements in earnings growth for the quarter is the communication services group, whose first-quarter earnings have increased almost 45% year-over-year.<\/p>\n\n\n\n

It is also important to mention that net profit margins are pacing for 11.7% growth in the first quarter, above the five-year average of 11.5% growth and higher than the same period a year ago. Jean Boivin, the head of the BlackRock Investment Institute, said:<\/p>\n\n\n\n

\"Higher interest rates usually hurt U.S. stock valuations. Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine.\"<\/em><\/p>\n\n\n\n

\"S&P<\/figure>\n\n\n\n

See Related:<\/em><\/strong> Citigroup's First-Quarter Earnings Drop 27% On Reorganization Costs<\/a><\/p>\n\n\n\n

Optimistic strategists on Wall Street contend that robust earnings growth has fueled the S&P 500\u00a0 index's approximately 9% rally this year and may propel stocks even further. Citi Bank's equity strategy team led by Scott Chronert wrote in research this week that positive Q1 earnings results provide further support to the ongoing bullish view toward S&P 500 fundamentals, even as we navigate the Fed and underlying economic conditions.<\/p>\n\n\n\n

Results are still expected from several high-profile U.S. retailers, including Walmart WMT.N, which is due to report next week but despite earnings results investors will continue to focus on remarks from several Federal Reserve officials, looking for signs of lower future interest rates. Since Fed Chair Jerome Powell hinted against rate increases and nonfarm payroll data came in softer last week, investors are gaining confidence the central bank could begin its easing cycle soon.<\/p>\n","post_title":"The first-quarter U.S. Earnings Season Showed Further improvements. What To Expect From The Upcoming Days?","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"the-first-quarter-u-s-earnings-season-showed-further-improvements-what-to-expect-from-the-upcoming-days","to_ping":"","pinged":"","post_modified":"2024-05-13 17:33:48","post_modified_gmt":"2024-05-13 07:33:48","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16825","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16684,"post_author":"18","post_date":"2024-05-06 23:37:57","post_date_gmt":"2024-05-06 13:37:57","post_content":"\n

The Federal Reserve<\/a> could unveil plans as soon as this week to begin slowing the runoff of its massive $7.5 trillion bond portfolio. After more than doubling its holdings during the pandemic to stabilize markets, the Fed has been trimming its balance sheet since June 2022 at an aggressive $95 billion monthly pace.<\/p>\n\n\n\n

But with financial conditions tightening, many economists expect the central bank to soon \"taper\" this quantitative tightening (QT) program. This would involve cutting the caps allowing $60 billion in Treasuries and $35 billion in mortgage bonds to roll off each month without being replaced.<\/p>\n\n\n\n

According to minutes from the Fed's March meeting, officials favor first slowing just the Treasury runoff, perhaps to $30 billion per month. Their ultimate goal is to hold primarily Treasuries to better control interest rates and foster market functioning.<\/p>\n\n\n\n

J.P. Morgan economists, who lean toward a May taper announcement were of the opinion that the next step in the Fed's balance sheet reduction plan is pretty clear: cut the monthly cap on Treasury runoff from $60 billion to $30 billion.<\/p>\n\n\n\n

The decision allows the Fed to separate its QT efforts from rate policy as it battles still-high inflation. But both work in tandem to make monetary policy more restrictive overall.<\/p>\n\n\n\n

See Related:<\/em><\/strong> Decoding Wall Street's Shift: A Closer Look At Wall Street's Changing Perspective<\/a><\/p>\n\n\n\n

Reason To Delay Tapering<\/h2>\n\n\n\n

Analysts see little reason to delay tapering. They assert that there is no obvious reason to wait beyond this week's meeting. While the inflation outlook remains murky, moderating QT's upward pressure on borrowing costs could provide modest relief.<\/p>\n\n\n\n

As the Fed plots its next policy move, all eyes are on the pace of its balance sheet reduction. A tapering of QT would mark an incremental step in removing pandemic-era stimulus, but the magnitude and timing will signal how forcefully the central bank wants to lean against stubbornly high inflation.<\/p>\n\n\n\n

The path forward is fraught with uncertainty. Overshooting with excessive bond sales could jolt markets and economic growth. But pulling back too soon risks letting inflation pressures fester. Walking this tightrope will test the Fed's policy prowess in the months ahead.<\/p>\n","post_title":"All Eyes On Fed's Balance Sheet Taper Plans This Week","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"all-eyes-on-feds-balance-sheet-taper-plans-this-week","to_ping":"","pinged":"","post_modified":"2024-05-06 23:38:03","post_modified_gmt":"2024-05-06 13:38:03","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16684","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"},{"ID":16728,"post_author":"14","post_date":"2024-05-04 00:19:53","post_date_gmt":"2024-05-03 14:19:53","post_content":"\n

Wall Street's main indexes rose on Thursday, a day after the Federal Reserve left interest rates unchanged and hinted at a more dovish stance. The attention of investors now turns to an important job report that will be released on Friday and after this report, we could have a clearer outlook on the labor market and the interest rate path.<\/p>\n\n\n\n

According to the CME FedWatch tool, money markets currently estimate a 59% probability of a rate cut of at least 25 basis points happening in September, with a 70.8% likelihood of a rate cut in November.<\/p>\n\n\n\n

The main reason why we will not see lower interest rates earlier is the fact that Federal Reserve Chair Jerome Powell said that recent inflation data had not given policymakers enough confidence to ease monetary policy soon, noting that the U.S. central bank may need to keep interest rates higher for longer than previously thought. Naomi Fink, global strategist at Nikko Asset Management, said<\/a>:<\/p>\n\n\n\n

\"Inflation remains higher than desired in the United States, the Fed remains in wait-and-see mode and not ruling out (rate) cuts altogether. Meanwhile, the number of Americans filing new claims for unemployment benefits held steady at a low-level last week, pointing to a still fairly tight labor market.\"<\/em><\/p>\n\n\n\n

See Related: <\/em><\/strong>European Central Bank Hints At A Possible Crypto Mining Ban<\/a><\/p>\n\n\n\n

April Employment Report<\/h2>\n\n\n\n

Despite muted jobless claims it is also important to mention that data released on this Thursday showed a drop in planned layoffs, a surge in quarterly labor costs, and a sharp deceleration in productivity, all of which throws focus on Friday's much anticipated April employment report.<\/p>\n\n\n\n

Positive information is that the Organization for Economic Cooperation and Development (OECD) raised its global growth forecast, partially due to the resilience of the U.S. economy. First-quarter earnings season is almost complete, with 373 S&P 500 companies having reported their results and according to LSEG data, 77% of those companies have exceeded expectations.<\/p>\n\n\n\n

Investors are currently trying to balance this two-sided narrative: the U.S. economic situation, which still remains resilient, and at the same time the inflation picture, and interest rates, which will eventually be problematic for the stock market.<\/p>\n","post_title":"Wall Street Stocks Advanced On The Fed's Dovish Signals. Focus Now Moves To The Job Report","post_excerpt":"","post_status":"publish","comment_status":"closed","ping_status":"closed","post_password":"","post_name":"wall-street-stocks-advanced-on-the-feds-dovish-signals-focus-now-moves-to-the-job-report","to_ping":"","pinged":"","post_modified":"2024-05-04 00:19:59","post_modified_gmt":"2024-05-03 14:19:59","post_content_filtered":"","post_parent":0,"guid":"https:\/\/www.thedistributed.co\/?p=16728","menu_order":0,"post_type":"post","post_mime_type":"","comment_count":"0","filter":"raw"}],"next":false,"total_page":false},"paged":1,"class":"jblog_block_13"};

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