Markets Year-to-Date: DJIA: +14.93%/ S&P 500: +18.5%/ Nasdaq: +23.99%
Data Dump: Consumer confidence is up (+5 points), businesses are hiring, wages are moderately increasing (+2.9%), and unemployment has decreased to 3.6%.
Blurred Lines. The Federal Reserve met on Wednesday and decided not to make a change to their interest rate target (target remains at 2.25% to 2.50%). This sent the markets in to a tailspin with the S&P ending the day down -0.75%. Blame it on poor communication. The Feds statement after the meeting seemed to indicate the possibility of a rate cut as core inflation has declined and is now running below 2%. However, in Chairman Jerome Powell’s post-meeting press conference, he repeatedly stated that “the decline in core inflation is due to ‘transient’ factors”. Essentially, he does not see the decline in inflation continuing which supports his wait and see attitude towards interest rate changes.
The Fed’s job, and it’s autonomy, has not been made easy by President Trump, who continues to politicize monetary policy.
....up like a rocket if we did some lowering of rates, like one point, and some quantitative easing. Yes, we are doing very well at 3.2% GDP, but with our wonderfully low inflation, we could be setting major records &, at the same time, make our National Debt start to look small!— Donald J. Trump (@realDonaldTrump) April 30, 2019
What does it all mean? The narrative that the US economy is slowing led many to believe that the Fed could cut rates on Wednesday. When this didn’t happen, markets reacted negatively. This was compounded by mixed messages from Fed chairman Jerome Powell.
A strong jobs report on Friday suggests that the labor market is doing fine and inflation is not currently a threat. This indicates that positive earnings can continue, even without a rate cut from the Fed. The markets seemed to agree, with the S&P ending the day up +0.96% on Friday.
Facebook gets a face lift. On Tuesday Facebook announced a redesign of its app, logo, and website. This is part of the "new" Facebook. A company that says it will prioritize personal communication over spam on its news feed. What else was included in the announcement? A "Secret Crush" function and a new focus on privacy. TechRadar has more on these changes here.
Apple, more than just the iPhone. Apple’s first quarter sales beat analyst estimates. While iPhone sales declined 17%, revenue from services jumped 16%. This was seen as positive news as decreased demand for iPhone’s has led some analysts to question Apple’s future. A 5% dividend increase was announced as well.
Where’s the Beef? Beyond Meat’s stock traded for the first time on Thursday. The company, valued at 1.5 billion, is not yet profitable. Sales, however, are growing rapidly (up 170% in 2018). Cattle industry groups feeling the pressure from Beyond Meats statement, “we build meat directly from plants,” are trying to convince lawmakers to stop plant-based meat from using the word “meat”. Technically, cows also build meat directly from plants. But I digress. The stock was up 163% on its first day of trading.
Coming to a Burger King near you. Want to try Beyond Meats flagship product, the Impossible Burger for yourself? The company has partnered with Burger King to introduce the product nationwide. More on that here.
What I'm Reading:
How Mapping Shots in the NBA Changed it Forever, from FiveThirtyEight
Beyond Meat is Now Worth More Than All the Peas in America, from Barron’s
Thanks for reading. I hope everyone has a great weekend. We’ll see you next week!
*These are the general views of Stanton Burns and they should not be construed as investment advice for any individual. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Stanton Burns does not maintain positions in any securities mentioned as of the writing of this article. Past performance is historical and does not guarantee future results.