Weekend Wall Street #49 - Fed, Earnings, and The Best Trade Ideas for 7/24-7/27
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Happy Monday everyone and welcome back to Weekend Wall Street (on a Monday- sorry for the delay I just came back from actual Wall Street over the weekend!). The markets held green today with energy leading the pack, although the rest of the market was muted as we have another large week of catalysts and market moving information coming up. Here is today’s heat map:
This week is full of catalysts for different sectors, which I will get into in a minute. Treasury yields rose slightly today with regard to the upcoming monetary policy meeting from the Federal reserve this Wednesday. If investors are anticipating a more hawkish stance from the Fed, yields tend to rise, although the market isn’t pricing in too much from the Fed as the Fed Funds Futures are pricing in a 98% chance of a 25bps hike. With the fear and greed index at “extreme greed”, if the Fed really is hawkish we could be in for a slower second half of the year:
David Kostin from Goldman Sachs wrote in a report that there is good reason for the resilience of the market even in an environment of rising rates for three main reasons:
1) He believes earnings have bottomed in 2022 and that the period of declining profits is over.
2) Yields had risen among an environment of weak expected economic growth, but that outlook is now shifting to a more positive one.
3) Investors are expecting AI to boost the productivity and profitability of their companies.