SVET Reports
Wednesday's Markets Update (April 19, 2023)
On Wednesday, major stock indexes corrected downwards on technicals during pre-market trading and then resurged on corporate reporting during the regular trading session. As a result, the NASDAQ (o:12063, c:12157) remained at its Tuesday closing price, while BTC (o:29218, c:29227) slid down to the 28.5K support level in after-hours trading.
On the corporate side, Abbott reported earnings per share (EPS) of 1.03 (consensus: 0.99, previous: 1.73) and increased 7.82 percent since the previous session, while Morgan Stanley reported EPS of 1.70 (consensus: 1.67, previous: 2.06) and increased 0.67 percent. Another banking stock seeing higher highs was US Bancorp, which increased 2.33 percent.
On the macroeconomic side, the Fed published its "Beige Book," which is a report issued eight times a year by the Fed Board approximately two weeks before each FOMC meeting. The Beige Book provides an overview of current economic conditions across the twelve Fed districts, namely: Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
The recent Beige Book stated that overall economic conditions remained stable in the past few weeks, with "employment growth moderated somewhat" and "the rate of price increases appearing to slow." Two districts - Philadelphia and Richmond - reported contracting economic activity, while Atlanta, Minneapolis, Dallas, and San Francisco reported it slightly expanding.
In the 12th (San Francisco) District, labor market conditions remained tight overall despite softening in some sectors such as financial services and technology. Price levels rose during the reporting period, though at a somewhat slower pace. It was also noted that the recent flooding in the state led to supply disruptions and contributed to rising input costs, such as transportation, food, some construction materials, and insurance. However, it was emphasized that conditions in the residential real estate sector worsened and lending activity fell significantly in recent weeks amid higher interest rates and elevated uncertainty in the banking sector.
Overall, due to a slight slowdown in the pace of inflation, as well as tightening of lending conditions contributing to a decreasing money supply, the FOMC might consider taking a pause in its rate-hiking program. However, in my opinion, Powell's own political considerations, as well as bureaucratic inertia, will allow him to stick to his "strategy" and hike rates by another 0.25 points.