Let's get to the big story.
Breakdown.
While policymakers at the Federal Reserve are expected to stay pat at the benchmark Fed funds, with the benchmark Fed funds rates staying on pause, while market attention will be squarely focused on Powell's post-meeting remarks tomorrow afternoon at 2:30 p.m.
Eastern Time.
Now investors will seek urgent clarity on how the central bank anticipates the ongoing conflict in the Middle East and how it will affect the broader US economy.
Well joining me to.
And all markets as well as the central bank is Eric Criscuolo who is a Market Strategist here at the New York Stock Exchange.
Eric, good morning.
Thank you so much for joining me and happy St.
Patrick's Day.
Happy St.
Patrick's Day to you, Rey, always a pleasure to be here.
Well, thank you so much.
So ahead of the market open on this Tuesday, we are looking at green for now in terms of stock futures, but there's been plenty of volatility and of course we're monitoring the situation in the Middle East and oil is back up.
So how are you heading into this week?
Yes, like you said, it is all about oil and the moves in oil, and every time oil ticks lower, equities tend to be rising with it almost tick for tick and then in the opposite way as well.
So listen, right now the market is completely focused on the price of oil and what's happening in the Strait of Hormuz and just the dynamics there.
And until we see some dramatic de-escalation or until we see that strait open up for more oil to flow through, that's just going to be what everyone's lives. and we're also focused on the central bank, not because we expect the Fed to make any rate changes anytime soon, but in terms of the politics, geopolitics and how that will affect the central bank moving forward.
So what are you expecting to hear from Powell and how accurate do you think those summary of economic projections will actually be?
That's a great question.
I think, I think like you said, the market is pricing in pretty much absolutely no rate.
So we're going to stay steady there, but the Q&A session is going to be where all the focus is going to be, you know.
Powell is going to be probably asked about the inflation expectations.
He's going to be asked about the SEP, the dot plot, and and where or how the committee has moved those dots up and down as far as the CPI or the PCE expectations, the inflation expectations, as far as GDP expectations, and also as far as the unemployment rate.
It looks like you're probably going to see the inflation expectations, you know, move up a little bit on the heels of just the energy shock, the oil shock, but we're going to have to see where those levels actually come out and then just the press conference is just going to be. hounding him on those dots on the expectations where they are.
He's probably going to be asked about the politics of the central bank, how long he's going to stay on, all the other kind of drama that's going on, and he's probably going to take the high road and say, I have no comment, basically parroting what he said last time in front of everyone.
Yes, and as Americans out there are continuing to monitor gas prices as well as energy prices right now, according to the AAA, the national average for a regular gallon of gasoline stands at $3.79.
So Americans are concerned about the cost of living.
But here on Wall Street, what is moving the markets right now and why are we seeing the action that we are?
Yes, well, I think the market is trying to figure out which way it wants to go, right?
You saw.
Nvidia come out with their GTC comments $1 trillion in GPU chips over the next couple of years.
That's an insane number, but also also insane, kind of expected, you know, so it kind of helps that sentiment.
It firms up the AI narrative that this spending, at least in the midterm, is not going to stop anytime soon.
But then you're also seeing some Tech companies announce or possibly announce layoffs.
We've seen a few.
Last week there was rumors or news that Meta could be the next company to have a significant workforce reduction, citing the reason as AI.
Now what's being asked is, is it really AI or is AI being used as an excuse to just cut the labor force that grew too much over the past Several years that's not a question that I can answer, but that is something that's been asked about and that comes back to margins, right?
You were spending all this cap.
The cash flows are rapidly shrinking for some of these hyper scalers.
These margins, these businesses have had fantastic margins.
So you know if your cash flow is shrinking, you know, can you protect things on the margin side by reducing your labor force?
It's possible.
Again, I don't know the Real reasons why I am certainly not an expert there, but those are the type of things that are being discussed right now because the earnings expectations have been moving higher and that's what's keeping up.
That's one of the reasons why stocks have been keeping up their pace, or at least not cracking yet, is because we really haven't had a reason to materially lower any S&P 500 earnings expectations.
Yes, and you bring up an important point because there are a lot of companies that were focused on, especially on the heels of earnings.
Season and we are obviously looking ahead to the upcoming earnings season already, which is hard to believe.
But as we continue to monitor price action here on Wall Street, what are some price targets that you have right now, just not just equities but also other asset classes?
Yes, so I unfortunately cannot give or probably fortunately I can't give any recommendations or kind of target prices, but you know, generally speaking, coming into the year you saw Price targets for the various strategists across the sell side banks, you know, adding for the S&P to be up anywhere from high single digits, you know, low 1012, 15%, you know, that's kind of the general range that everyone is kind of focusing on, you know.
I don't think many people had oil at $100 so that was obviously a shock.
So you know that's probably recalibrating some things and then.
The gold, the silver, the commodities moves again, those are, you know, around where we are right now.
There are some very bullish people on the street that think gold is going to go much higher, silver is going to go much higher.
There are also some people that think that it can pull back.
I know unfortunately that's kind of playing both sides of the fence there, but it just kind of goes to show that there's a lot of diverging opinions as to where things are going and how things get there and now.
The Iran situation into everything and it's kind of really putting a question mark into where and how prices move forward.
You look at something like Bitcoin, Bitcoin was kind of under pressure.
The whole crypto complex has been under pressure for a little bit now. it's kind of perking up a little bit.
Bitcoin is making a run to it I think it's 50 day moving average.
So those are levels to kind of look at and see if money kind of flows into some of those other areas like commodities where it has been.
Does it flow back into Bitcoin as Bitcoin starts to work?
Well, we'll have to monitor the situation in the Middle East and of course we'll keep an eye on the price actions.
So thank you so much, Eric, for joining us and thank you so much for sharing all of your insights.
Always a pleasure, Remy.
Thank you.
