Chair Jerome Powell has achieved a near-perfect consensus as the Federal Reserve raised interest rates aggressively. Now, with the hiking campaign drawing to a close, that agreement is going to be a lot tougher to maintain.

With inflation as high as 9% in the past year, Powell’s colleagues were all-in on the fight to curb price pressures, with another 25 basis-point hike expected Wednesday that might be the concluding increase. Yet that consensus is already showing signs of splintering, amid inflation that remains too high while Fed staff — and many private economists — see a recession in coming months.

Since Covid-19 threatened the US economy in early 2020, Powell has secured more than 98% of the Federal Open Market Committee’s votes in favour of his actions, first to stimulate growth during the recession and then to fight inflation in the past year. Rising dissents are more likely as the choices of battling inflation or much higher unemployment become more troubling. (BBG - Continue Reading) 

Apple, Marriott International and Starbucks are among the companies that will report quarterly results in coming days, offering a closer look at consumer spending habits in a slowing economy.

Ride-hailing company Uber, auto maker Ford and pharmacy chain CVS are also scheduled to report, as consumers face steady price increases and inflation shows few signs of retreating. The companies are among 162 in the S&P 500 slated to report during a busy earnings week as investors weigh signals about the direction of the broader economy.

US economic growth slipped in the first quarter, with gross domestic product up a seasonally adjusted 1.1%, which was down from the 2.6% growth reported in the fourth quarter. Many economists expect the economy to lose more steam as the year progresses, predicting a recession in the second half. (WSJ - Continue Reading)

At first blush, stock bulls on Wall Street have history on their side if the Federal Reserve’s aggressive policy-tightening campaign really is drawing to a close.

Over eight previous monetary-tightening cycles, the S&P 500 ended up higher by an average 13% a year after the last interest-rate increase, per Strategas Securities. Meanwhile the famous American consumer remains largely alive and well, first-quarter corporate earnings are reviving Big Tech and supply bottlenecks are easing. All that raises the possibility of a fresh bull cycle ahead akin to the mid-90s. 

Yet money managers aren’t jumping in — with another $2.7 billion pulled from US equity funds in the week through April 26 according to EPFR Global. (RTRS - Continue Reading)