Let's get to the big story breakdown.
Today is Fed day, the central bank, widely expected to hold interest rates steady when it announces its decision at 2 p.m.
Eastern.
Now Chair JA Powell will follow with a press conference at 2:30 p.m.
Eastern time.
Now Wall Street is looking at the open on the heels of economic data and a slew of earnings, and keep in mind that Friday does mark the Trump administration's deadline for.
Trade deals.
He had previously pushed back the start of reciprocal tariffs to August 1st.
Well joining me on this Wednesday morning is Tim Anderson, managing director at TJM Investment.
Tim, good morning.
Thank you so much for joining me.
It is great to be with you on this very news rich Wednesday.
Indeed, we have the Fed meeting today announcing their rate decision, but we also have a slew of economic data.
So Start out there.
There are some pretty significant earnings coming out later in the day and yeah, after the close for tech.
So what do you make of what we're seeing?
I just think that in terms of earnings, they're going to be watched very closely because the markets had a pretty strong run, particularly a lot of AI-driven tech stocks that have been pushing the rally off the.
Lows, so I'm not going to say that they are absolutely priced for perfection, but I think that they have to hit their markers and then some to continue the momentum that they've shown in the market over the last few months.
And with the Fed obviously will get a lot of attention.
It's very, very likely that they will not.
A cut rates, although I am sure that shortly thereafter there will be quite a bit of commentary from a number of sources as to why they should.
Yeah, so we'll be listening to that presser later this afternoon, but after we Get the Fed.
We also get key earnings out from some of the mag 7 companies.
But before we get to that, let's talk about GDP as well as ADP ahead of that Friday's job.
So what do you make of the data points?
Well, look, the GDP number this morning is just a A real Goldilocks number just to use probably an overused cliche, but to have 3% growth and to have and to have a a deflator or an inflation rate of 2% just really flies in the face of one of the Fed's.
Constructs of their whole economic model that growth causes inflation.
So I, I, and I think that part of the whole issue with the Fed is not just Jerome Powell, it's just that the economic models that they've been relying on with hundreds of people.
HD economists poring over them over and over and over again have just haven't been reworked for decades and they just don't, they're a little off.
So you know this, they will eventually um start cutting rates, but it could easily be justified today.
Yeah, so what do you think it's going to take for the central bank to actually begin cutting rates here?
I think they will have to to realize that the uh main big concern that they at least keep talking about that the tariffs are protected.
Potentially going to cause a return and another spike in inflation, it has to be diminished and I think that if they were to consider the fact that that Productivity is way underweighted.
In their model you can have significant growth.
But if it depends where it comes from.
If it's coming from the Fed flooding the system with money like they did COVID and post-COVID, that's going to cause inflation.
If it comes from significant.
Increases in productivity like you're likely going to continue to see from a lot of the AI implementation that companies are are being able to put online um you know, 12 to 18 months after this AI phenomenon started.
Then productivity growth from productivity does not necessarily cause inflation.
In fact, if they would go back and listen to Alan Greenspan's comments after the internet revolution, well into the internet revolution, he very publicly stated after he left the Fed that the biggest thing that he missed on the economy was the impact that productivity was going to have on the economy.
And Tim, finally we have about 60 seconds here, so I do want to get your take on what you're watching for earnings after today's bell.
Well, you've got to watch, of course, uh what you're going to have uh.
Facebook meta, you're going to have Microsoft and then you're going to have big earnings tomorrow so uh you just got to see if these companies can hit their metrics and the the the most positive uh.
The item out of Google's earnings, Alphabet's earnings last week was that they said they were going to significantly increase their capital expenditures going forward, and that's what got an initial big short move higher and the stock get settled in a little bit after that some well deserved profit taking, but With this bill that was recently passed, including a provision for not just accelerated depreciation, but immediate expensing of capital expenditures. is unprecedented and you should see all of these major tech companies as well as other major industrial companies.
Increase their capEx spending as much as they possibly can over the next 2 or 3 years because they can expense everything immediately.
Well, we know that we'll be watching Capex when it comes to meta after the bell today as well as Microsoft.
So always great talking to you, Tim.
Thank you so much for joining me.
Have a great week.
