Chief Investment Strategist, The Freeport Society
Hello, Fellow Navigator.
Earning season kicks off on Friday. Analysts are calling for it to be a good one. They reckon S&P 500 earnings will have grown 3.2% in the first quarter. They expect revenue to rise 3.5%.Seven of the 11 S&P 500 sectors are forecast to post year-over-year earnings growth. And eight sectors are estimated to post year-over-year revenue growth.
Great.
But before we break out the Champagne, we need to get through the next few days.
The Consumer Price Index (CPI) will be published tomorrow morning.
Economists project headline CPI and core CPI, which excludes food and energy, to rise 0.3% in March, down from 0.4% in February.
CPI is also expected to come in at an annualized 3.5%, while core CPI is forecast to increase 3.7% year-over-year.
In other words, inflation is far from dead.
The latest Producer Price Index (PPI) will be released Thursday morning. Currently, economists expect the PPI to come in at 0.3% in March, down from 0.6% in February.
Wall Street will obsess over the inflation data as it always does, but the fact of the matter remains that we do need to see inflation fall before the Federal Reserve will cut key interest rates.
(My friend and Freeport Society colleague Louis Navellier is holding a special Election Shock Summit tomorrow, April 10, at 8 p.m. Eastern time, to explain why this is important for the stock market. A special guest will be joining him to share his thoughts as well… including the steps you need to take before May 1. Reserve your seat now by clicking here.)
Are Rate Cuts Required This Year?
During Fed Chairman Jerome Powell’s speech at Stanford Business School last Wednesday, he said the Fed still has time to access the recent inflation data before deciding when to start cutting key interest rates.
Powell stated that recent higher-than-expected inflation data did not “materially change” the overall picture and reiterated that it will likely be appropriate to start lowering key interest rates “at some point this year.”
Regarding the Fed’s reaction to the core PCE, Powell commented, “It is good to see something coming in line with expectations.”
The stock market rallied on Thursday morning in the wake of Powell’s comments. However, on Thursday afternoon, the stock market did an abrupt “about face” after Minneapolis Fed Bank President Neel Kashkari said that he penciled in two rate cuts this year, but that if inflation continues to stall, there might not be any rate cuts.
How’s that for a cold slap upside Wall Street’s face!
Specifically, Kashkari said: “If we continue to see inflation moving sideways, then that would make me question whether we need to do those rate cuts at all… There’s a lot of momentum in the economy right now.”
We’ll learn more during the May Federal Open Market Committee (FOMC) meeting, scheduled for May 1. One experienced analyst predicts Powell will say six words during that press conference that could have a massive impact on not only the stock market but the presidential election.
We here at The Freeport Society don’t want you to be blindsided, so Louis is holding a special Election Shock Summit tomorrow (it will start at 8 p.m. Eastern time). Click here and register for the Election Shock Summit event now. You have only one more day to reserve your spot.
To life, liberty, and the pursuit of wealth,