Tech Earnings and the Fed: This Week in the Markets

In this buzz: all about inflation; factors; FED; interest rates and more.

In a busy week for data, Alphabet, Amazon, Microsoft and Meta are all due to report earnings this week. Plus, there is US GDP, Consumer Income and the University of Michigan Consumer Sentiment. Heap on BOJ minutes, Aussie CPI and an emergency meeting of EU Energy Ministers and there’s a lot for the markets to digest.

The biggest news of the week, however, will come from the Fed. On Wednesday, the Federal Reserve will conclude a two-day meeting where it is widely expected that they will announce another three quarter point hike in rates.

Last month, the Fed shocked some participants by hiking 75 basis points to get inflation, which is at 40-year highs, back under control. Economists are divided on the path of Fed moves.

• Some believe that there are already signs that inflation is beginning to abate (the transitory camp) and are concerned that too many and/or too aggressive hikes could lead to recession.
• Others believe that the inflation genie is already out of the bottle and the Fed needs to be even more aggressive on fighting inflation. That camp believes that the Fed should raise rates more aggressively, i.e., by 100 bps as they are so far behind the inflation curve.

Fed chairman Jerome Powell is trying to engineer the elusive “soft landing” for the economy; not too hot and not too cold.

However, there are so many factors that can contribute to inflation and so many fingers pointing in different directions:
– easy money
– supply-chain pressures
– Biden, Putin, the war in Ukraine
that it makes this inflation debate extraordinarily complex.