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Chicago, IL – September 25, 2018 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes CME (CME - Free Report) .
The Fed Is Deftly Walking the Razor’s Edge
The board of the U.S. Federal Reserve meets on Tuesday and Wednesday to assess the state of the economy and make a decision about whether to raise short term interest rates. Traders put the chances of a 25 basis point hike in the target fed funds rate at 93.8%, according to the CME’s “FedWatch” tool which is based on traded prices in the Fed Funds futures contract. The chances of a 50 basis point raise have been increasing and now stand at the remaining 6.2% with essentially no expectation of zero Fed action at this meeting.
Fed Chairman Jay Powell has expressed his intentions to continue with a series of small rate hikes throughout the rest of 2018 and into next year to pump the brakes on a U.S. economy that continues to hum along with GDP growth above 3% annually, unemployment under 4% -- which many economists consider to be basically “full employment” – and inflation hovering very close to the Fed’s stated target of 2%.
The markets are pricing in a 74% chance of one additional rate hike by December of 2018, which would bring the target rate to a range of 225-250 basis points which is still below historical averages, but much higher than the zero rates we saw during the financial crisis ten years ago.
The Fed’s most recent “dot plot” -- which assesses FOMC participants expectations for appropriate monetary policy over the next two years and beyond – shows a likelihood of 3-5 more 25 basis point moves through the year 2020 with rates normalizing of even declining slightly after that.
In a sense, this is actually the toughest environment for the Fed to consider these moves. When the economy is clearly sluggish, the Fed can be expected to stimulate growth with a series of rate cuts, and when inflation is raging, everyone expects the Fed to tighten significantly.
During his 8-year tenure as Chairman of the Fed between 1979 and 1987, Paul Volcker faced inflation and unemployment numbers in the double digits and wielded rate hikes as a blunt tool - at one point raising the Fed Funds target rate 4% in a single month. In hindsight, these moves are widely credited with reigning in inflation and setting up the remarkable economic expansion of the 1980s and 90s.
Starting with the Greenspan era and continuing through Bernanke and Yellen, the Fed has taken a more restrained approach, raising and lowering the benchmark short-term rate gradually to stimulate growth and reign in inflationary pressures.
Chairman Powell has endeavored to be as transparent as possible, telegraphing his intentions ahead of time and increasing the frequency of post-meeting press conferences to keep business leaders and the investing public aware of the Fed’s plans and reducing the market impact surrounding interest rate moves.
The equity markets have taken the recent series of rate increases in stride, safe in the knowledge that the Fed’s intentions are to temper increases in inflation while still allowing healthy economic expansion. Powell’s role remains challenging however as he oversees an economy that’s extremely healthy by every measure and seeks to strike a balance between allowing unfettered, inflationary growth and “taking the punch bowl away from the party.”
Unless we see that longshot 50 basis point hike this week or a drastic change in the Fed’s statement on future plans, this week’s action is likely to be largely a non-event. Powell and the board of governors have shown the ability to keep economic growth simmering - but without boiling over - and all signs point to more of the same as we continue to enjoy one of the healthiest economies in history.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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CME is part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – September 25, 2018 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes CME (CME - Free Report) .
The Fed Is Deftly Walking the Razor’s Edge
The board of the U.S. Federal Reserve meets on Tuesday and Wednesday to assess the state of the economy and make a decision about whether to raise short term interest rates. Traders put the chances of a 25 basis point hike in the target fed funds rate at 93.8%, according to the CME’s “FedWatch” tool which is based on traded prices in the Fed Funds futures contract. The chances of a 50 basis point raise have been increasing and now stand at the remaining 6.2% with essentially no expectation of zero Fed action at this meeting.
Fed Chairman Jay Powell has expressed his intentions to continue with a series of small rate hikes throughout the rest of 2018 and into next year to pump the brakes on a U.S. economy that continues to hum along with GDP growth above 3% annually, unemployment under 4% -- which many economists consider to be basically “full employment” – and inflation hovering very close to the Fed’s stated target of 2%.
The markets are pricing in a 74% chance of one additional rate hike by December of 2018, which would bring the target rate to a range of 225-250 basis points which is still below historical averages, but much higher than the zero rates we saw during the financial crisis ten years ago.
The Fed’s most recent “dot plot” -- which assesses FOMC participants expectations for appropriate monetary policy over the next two years and beyond – shows a likelihood of 3-5 more 25 basis point moves through the year 2020 with rates normalizing of even declining slightly after that.
In a sense, this is actually the toughest environment for the Fed to consider these moves. When the economy is clearly sluggish, the Fed can be expected to stimulate growth with a series of rate cuts, and when inflation is raging, everyone expects the Fed to tighten significantly.
During his 8-year tenure as Chairman of the Fed between 1979 and 1987, Paul Volcker faced inflation and unemployment numbers in the double digits and wielded rate hikes as a blunt tool - at one point raising the Fed Funds target rate 4% in a single month. In hindsight, these moves are widely credited with reigning in inflation and setting up the remarkable economic expansion of the 1980s and 90s.
Starting with the Greenspan era and continuing through Bernanke and Yellen, the Fed has taken a more restrained approach, raising and lowering the benchmark short-term rate gradually to stimulate growth and reign in inflationary pressures.
Chairman Powell has endeavored to be as transparent as possible, telegraphing his intentions ahead of time and increasing the frequency of post-meeting press conferences to keep business leaders and the investing public aware of the Fed’s plans and reducing the market impact surrounding interest rate moves.
The equity markets have taken the recent series of rate increases in stride, safe in the knowledge that the Fed’s intentions are to temper increases in inflation while still allowing healthy economic expansion. Powell’s role remains challenging however as he oversees an economy that’s extremely healthy by every measure and seeks to strike a balance between allowing unfettered, inflationary growth and “taking the punch bowl away from the party.”
Unless we see that longshot 50 basis point hike this week or a drastic change in the Fed’s statement on future plans, this week’s action is likely to be largely a non-event. Powell and the board of governors have shown the ability to keep economic growth simmering - but without boiling over - and all signs point to more of the same as we continue to enjoy one of the healthiest economies in history.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.