Focus on the data, not what the Fed speakers are saying, says Art Hogan
Despite the “parade of Fed speakers,” that’s not what investors should be focusing on, according to Art Hogan, chief market strategist at B. Riley Financial.
“I think investors need to pay more attention to what the data is telling us than what every Fed speaker, voting or not, has to say about what our expectations should be,” Hogan told “Squawk Box ” from CNBC. Asia”.
Still, he said Fed officials have been able to shift expectations about where Fed policy is headed.
The president of the Federal Reserve of St. Louis, James Bullard said on Tuesday that the central bank will have to keep raising rates and that the Fed funds rate will likely have to go to 3.75%-4% by the end of 2022. San Francisco Fed Mary Daly said Tuesday. “Our work is far from done” in the fight against inflation, while Chicago Fed President Charles Evans said another major rate hike is possible, though he expects can be avoided
After last week’s meeting, some expected the Fed to continue hiking to 3.25%-3.5% before pivoting in 2023, Hogan said.
“I think the parade of Fed speakers this week has done a good job of pushing that back, reducing those expectations,” he said.
— Abigail of
Jefferies says these stocks are poised to bounce back if inflation peaks
A slowdown could be on the horizon and further earnings cuts are forecast. If inflation also peaks, as some analysts expect, that combination of factors will favor one share class, Jefferies says.
Jefferies produced a screen of these stocks that investors can buy, based on a list of metrics that include high profitability, reasonable valuations and good cash flows. Professional subscribers can read the story here.
– Weizhen Tan
PayPal Raises Earnings, Share Buyback Announcement
PayPal shares soared more than 11% after hours. The payments company beat analysts’ earnings and revenue estimates for the second quarter and issued upbeat full-year guidance. PayPal also announced a $15 billion share buyback program.
Share buybacks offer companies a way to increase their earnings per share and improve the value of their shares, especially while the market is generally suffering a sharp decline in prices this year. The company started a $10 billion program four years ago.
Elliott Management said it has a $2 billion stake in the payments giant. PayPal announced that it signed an information sharing agreement on value creation with the activist investor.
— Tanaya Macheel
Even as the Fed talks about fighting inflation, a ‘cycle of easing’ is emerging, says Leuthold’s Jim Paulsen
Leuthold Group chief investment strategist Jim Paulsen said that despite the “continuing cry from the Federal Reserve to fight inflation” by tightening monetary policy, there are several factors that suggest that the market may be entering an “emerging easing cycle.”
Bond yields have taken a sizeable rate cut, the dollar is finally reversing and junk spreads have narrowed, he said in a note to investors late Tuesday.
“The media, policymakers and investors are mostly focused on the war on inflation and how aggressively the Fed will need to keep rates up,” Paulsen said. “However, with real economic growth already down to a crawl and evidence that inflation is easing, the case for further Fed tightening at its September meeting is rapidly disintegrating.”
“Investors should give adequate weight to the guiding nature of economic policies,” he added. “Tightening today means less real and nominal growth tomorrow.”
— Tanaya Machel
MatchGroup shares fall after hours
Shares in dating app operator Match Group fell as much as 23% after the company reported revenue of $795 million for the second term, compared with FactSet estimates of $803.9 million. Match also issued weak guidance on operating income and adjusted earnings for the current quarter.
— Tanaya Machel