Economy
We had a bit of a break of economic data this week, but things will get busy again soon. Of note this week, the number of people filing for unemployment insurance rose very slightly, suggesting continued strength in the labor market. This latest data point sets the stage for the Fed's meeting in a few days at which they are expected to pause their rate cutting. While no rate cut is expected, Jerome Powell's press conference will be the most interesting part of the day. In his first few days of his second term, President Trump made comments directed at the Federal Reserve suggesting, or rather, demanding, that interest rates be lowered. We previously wrote about how the Fed and President Trump could be on a collision course following his election, and it looks like that could be materializing. Powell is surely to get asked about these remarks on Wednesday. For now, Wall Street doesn't seem to think the President's comments will impact the Fed's policy, as the probability of rate cuts remained unchanged. As of today, the market is pricing in one or two rate cuts in 2025.
Markets
The S&P 500 rose 1.7% this week and touched a new all-time high. Corporate earnings are off to a strong start in the early days of earnings season. Worries about a resurgence in inflation have subsided a bit as so far the new administration has only threatened but not made good on its promise of tariffs. While those of us in Kansas City are hoping to get by the Bills tomorrow and punch our ticket to a third straight Super Bowl, next week is the Super Bowl of earnings season. (Don't repeat that line at your Chiefs watch party if you want to maintain your "cool" factor.) Four of the "Magnificent Seven" stocks will report (Apple, Meta, Microsoft, Tesla). We have said a lot about how the expectation for earnings growth in 2025 is very high, but that could be what the market needs to continue this bull run.
What We're Reading
- Is It Time to Lock In 5% Yields? - Ben Carlson
- Pension Funds Want Private Equity to Open Up About Fees and Returns - WSJ
Have a great weekend.
Dogwood Wealth Management