Click here for the PDF: The Weekly Beacon – January 19 2024
We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.
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This weeks issue: FED members, FED policy, Interest rates, G7 countries, G7 real estate, Canadian real estate bubble, Government spending, Housing starts in Canada, Spirit airlines, JetBlue Spirit deal collapse, Government breaks merger, SAVE stock, Taiwan election, China vs. the U.S., Chinese tech stocks versus U.S. tech stocks, technology stocks, China economy, China growth, Burger King stock, Restaurant Brands International stock, Carrols Restaurant Group stock, Uranium stocks, Sprott Uranium Trust, Kazatomprom production, Cameco stock, France and nuclear energy.
FED members are not in a rush
FED Governor, Christopher Waller spoke at the Brookings Institution, a DC-based think tank that specializes in economics, and foreign policy on Tuesday and shed some light on what the FED’s next move might be.
Waller said that the FED is likely to cut interest rates this year but there is no need for policy to be rushed. He went on to say that the FED will be careful, and methodical with interest rate cuts. He said the FED will not cut rates like they have in the past, as there is no reason to move as quickly as they have in past cycles. Waller went on to say that the timing and number of rate cuts this year will be driven by upcoming data releases.
Markets have priced in seven rate cuts this year beginning with one in March. However, last week numerous FED officials tried to push back on the expectations of rapid cuts to start 2024.
Waller claimed that economic data from 2023 was “almost as good as it gets” for the situation the economy was in to start the year. Waller’s outlook on inflation is like most FED board members believing inflation is on a path to 2% and will eventually get there.
These comments by Waller are nothing new but reconfirm our thoughts that the FED will be hesitant to cut rates immediately (barring something major happening) leaving rates higher for longer. We think optimism is a great trait in certain areas of life but false hope and ignoring reality has negative consequences, especially in financial markets. Ultra-bulls want numerous rate cuts immediately to feed their bull market thesis and justify the valuations of the stocks they own.
Do not be surprised if the FED drags its feet with rate cuts.
