M Notes: Mon, 4-27

LAST WEEK:  

Markets:  Overall, in spite of no Iran deal, Markets grew a touch last week.  

S&P roller coaster last week:  Down, Down, Up a lot, Down, and Up a lot.  

Fed Balance Sheet:  $6.707 Trillion.  Up $1 Billion last week.   

Fed Nominee:    Kevin Warsh, President Trump’s nominee for the Fed Chair, appeared before the Senate Banking Committee last Tuesday.  Democrats, led by Massachusetts Senator Elizabeth Warren, wanted to know details regarding his wealth and investments.  And they expressed their concerns about Warsh’s ability to be independent.  Warsh skillfully sidestepped the traps that were laid out for him. 

What was interesting, from my perspective, was the direction Warsh would take the Fed.  Two pieces.  First:   the Fed has two primary levers:   Interest Rates and their Balance Sheet.   Warsh will focus on Interest Rates, and over time, seek to diminish their Balance Sheet.  Warsh said the practice of using Quantitative Easing was meant to only be used in an emergency (like what happened in 2008).  It wasn’t meant to be permanent, nor a de facto way to Legislate.  He noted the Fed’s Balance Sheet was about $800 Billion when he came to work with the Fed 20 years ago.  And, while it will take time to unwind (it’s now $6.7 Trillion), one of his objectives will be to lower it significantly.  Second:   another one of Warsh’s goals is to focus on finding more reliable Data sources, for the FOMC to base their decisions on.  

Metals:  Gold finished the week at $4,741.  Silver finished the week at $76.

National Debt:  $39.170 Trillion.  

Retail Sales:  They were up +1.7% in March (consensus was +1.4%), the highest result in a year.  RS were up +4.0% Y/Y.  

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THIS WEEK:

Focus of the week:  The Fed and Inflation.  The Fed’s FOMC meets for the third time this year.  The meeting starts on Tuesday, concluding Wednesday.  Normally, the focus would be on what will they do with their Interest Rate and Inflation.  And those things will certainly be their focus.  But our focus will also be on Jerome Powell.  Now that the DOJ has dropped their investigation, this could be Powell’s last meeting as the Fed Chair.  

Calendar:   Fed Meeting Statement, Fed Chair press conference, Durable Goods Orders, House Starts (Wed); the first read on Q1 GDP, the PCE (Thu); and ISM’s Manufacturing index (Fri).  

Earnings:  some of the companies reporting this week:  Christian Dior, Costco, Heineken, L’Oreal, and Morgan Stanley.

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* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.    The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks.  The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.  Yahoo! Finance, the Wall Street Journal, Investor’s Business Daily and Barron’s are several of the sources used for financial information. 

* The National Debt figure comes from usdebtclock.org.   

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.  Consult your financial professional before making any investment decision.  You cannot invest directly in an index.   Past performance does not guarantee future results. No strategy can assure a profit or protect against a loss.  Investments in the securities markets involve risk, such as loss of your principal.