VIDEO: Why the Market Shrugged Off Powell's Press Conference
Chris discusses what stood out in the Fed Chair’s Q&A, and why we have our eyes on Broadcom earnings and tomorrow's investor presentation from Coty.
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In today’s Daily Rundown video, Chris Versace discusses what stood out in Fed Chair Powell’s policy press conference today, and why the market thinks the Fed may be too conservative in its forecast.
He also shares why we’ll be paying attention to quarterly results tonight from Broadcom AVGO, and Coty’s COTY management presentation tomorrow.
Transcript
CHRIS VERSACE: Hey, folks. Chris Versace here. June 12. Fed Chair Powell is just wrapping up his post-Fed monetary policy presser. As you can see, the market is continuing to be up nicely, despite the Fed signaling that it's only going to see one rate cut this year. But it does see additional rate cuts in 2025. The net message being, of course, that the Fed continues to see the economy being strong. But progress on inflation has only made some additional progress.
Of course, the market sees it a little differently today, really leaning into what we saw in the May CPI report. And I think there's a couple things going on here. First, during his presser, Fed Chair Powell did admit that not many of the Fed participants updated their economic outlook based on today's May CPI report. So the market's probably thinking that these updated projections that we got today are already slightly out of date.
Also too, when walking through some of the adjustments, particularly on the PCE line, Fed Chair Powell did say that the Fed heads are being a little conservative. So I think this totality has the market thinking that even though the Fed is showing maybe just one rate cut, if we continue to get more good data like we saw today, the odds of potentially two rate cuts is looking a little bit better.
So we'll have to, obviously, continue to watch the data. Fed Chair Powell did point out that it's not just any one data point the Fed is looking at. We've been talking about this. But he did reaffirm that the Fed is going to be looking at the data in totality. That means that they will be looking at what's going on in the economy, what's going on in inflation, and what's going on in terms of job creation.
The other comment that Fed Chair Powell made towards the end was that the Fed is not waiting for the economy to break. Rather, it wants to continue to sustain the path that it sees the economy is on right now, meaning continued good economic growth, continued good job creation, and improving inflation. So again, we're going to have to continue to watch all of the data. And that means paying very close attention to tomorrow's May producer price index report.
Now, we'll be reviewing that tomorrow morning with you. We will also be sharing what we see in quarterly results after today's market close from Broadcom. Now, why Broadcom? Well, simply because they touch a number of the areas that the portfolio is invested in, meaning that they will be issuing comments about the smartphone market, the data center market, AI, and cybersecurity. So even though we don't own shares of Broadcom in the portfolio, they do touch many of those areas. And we will be paying close attention to that.
I say this in part because if you look at today, our shares of Apple, Qualcomm, NVIDIA have all been up strong. The same is also true for Universal Display and even Axon as well catching some market love. So we'll want to decipher some of these comments from Broadcom after the close. And again, we'll be updating our thoughts with you. So please be sure to check your alerts.
Remember too that tomorrow, Cody Management is going to be giving its next management presentation at an investor conference. We signaled earlier in the week that we will be listening to this extremely closely as it relates to these shares. As we can see today, the shares for Cody did move up over the $10 mark, but they've also retreated despite the market's strength.
That tells us that even though Cody might be able to deliver on its turnaround plan, deliver great earnings growth in the back half of the year, at least for now, the market is a little circumspect, likely because of what it's seen not only in larger other areas of luxury goods, even though Cody doesn't participate in those segments, but still concerns about consumer spending.
Again, we'll be updating our thoughts on Cody shares after that presentation tomorrow. So tomorrow is going to be a busy day. So that brings me to the usual closing for our videos. Please be sure to check your emails, your alerts. We want to make sure you're getting our latest thinking. And if we make any trades with the portfolio, we want you right there with us. Thanks for watching.
At the time of publication, TheStreet Pro Portfolio was long COTY.
