FOMC, Earnings & Delta: Weekly Nifty 9

Research Report Excerpt #6

While there is not an expected shift in policy or messaging at the upcoming FOMC meeting and rate announcement, discussions about the pace and composition of the Fed’s bond-buying will continue. Still, Fed Chair Powell was speaking for the central bank when he told Congress recently that the bar to adjust the purchases (substantial further progress toward the Fed’s targets) has not been met. The Jackson Hole symposium at the end of August has long been seen as the first realistic window of opportunity for the Fed to signal its intention to slow, possibly alter the composition of its bond purchase program, and shape it more formally at the September FOMC meeting. The September meeting offers the Fed an opportunity to gradually begin messaging its tapering plans and/or intentions.

Reporters may try to draw Powell out but are unlikely to have much more success than the U.S. Senators and Representatives. There is ongoing interest in the size of the reverse repo facility, for which the Fed now pays five basis points at an annualized rate, the same as a 6-month bill. In addition, Powell pushed back against suggestions by some officials that the central bank’s MBS purchases are lifting house prices beyond the access of many American families.

Research Report Excerpt #7

The post-COVID era economy is developing along the lines of the post-World War II economy. The post–World War II shift to a peacetime economy, which catalyzed a cyclical rebound of growth and inflation, may be the closest historical analog to the post-COVID era. Strong postwar demand from healthy consumer balance sheets combined with a lagged supply response created upward pressure on prices.

Research Report Excerpt #8

Just last week, FactSet was tracking 69% YoY EPS growth for the Q2 2021 period. That tracking has already jumped 5% in the first couple of weeks of earnings season, and before the FAANMG stocks even report.

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