In this week's episode, we review the news from Wednesday’s Federal Open Market Committee (FOMC) meeting, highlighting four themes: a slower path to rate cuts; rising risk of policy dilemma and potential stagflation; decisions will be made based on data, not any pre-committed timelines; a policy bias towards easing but with less conviction. Overall economic indicators remain stable, setting us up for a peaceful weekend to celebrate the mothers in our lives this Mother’s Day.
Speakers:
Brian Pietrangelo, Managing Director of Investment Strategy
Cynthia Honcharenko, Director of Fixed Income Portfolio Management
George Mateyo, Chief Investment Officer
Rajeev Sharma, Head of Fixed Income
Stephen Hoedt, Head of Equities
01:57 – Weekly initial unemployment claims ending May 3 came in at 228,000, leveling out last week’s larger than average increase, signaling that unemployment remains stable.
02:25 – The Institute for Supply Management (ISM) Services Report showed a tenth consecutive month of expansion in April, and effectively for the past five years. This further contrasts with the weak manufacturing economy.
03:17 – News from Wednesday’s Federal Open Market Committee, during which the Fed maintained its current target rate of 4.25% to 4.50%, citing ongoing economic uncertainties especially from recent trade policies. We explore four key themes to level set future expectations.
10:18 – Due to the Fed’s cautious wait-and-see approach, and given the Trump administration’s 90-day pause on tariffs, the Fed will likely not make any significant decisions prior to its July 30 meeting.
11:04 – A potential trade deal between the United States and the United Kingdom may inform what we can expect on overall trade policy going forward.
13:19 – Both the S&P 500 and NASDAQ-100 are hovering around or above their respective 200-day averages, signaling continuing improvement after the Liberation Day fallout.
16:40 – News from Apple and Google appear to validate the idea that Artificial Intelligence is disrupting industry writ large, and a future with a new list of “Magnificent Seven” stocks may come sooner than later.
Additional Resources
Key Questions: Is Jay Powell’s Job at Risk, and What Are the Risks for Investors? | Key Private Bank
Key Questions | Key Private Bank
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