Market Update, Analyst Forecasts, and portfolio
The market has had a rocky February. However, the S&P500 has increased 3% in the first half of February. The key drivers have included earnings reports. The main macro drivers have been (a) the overhang from the Federal Reserve’s stance on interest rates, and (b) the higher than expected inflation report. However, 13F filings also landed in mid-February.
This update briefly canvases some of the major market drivers. Premium subscribers can also access analyst consensus forecasts and my listed portfolio below.
The Federal Reserve meeting was generally negative for the market. Jerome Powell reiterated that the Federal Reserve would be cautious about cutting rates. Jerome Powell suggested that it was unlikely that the Federal Reserve would cut rates in March and would look for further evidence that inflation was declining before cutting rates.
The inflation reading was higher than expected. Headline CPI increased 3.1% (vs 2.9% consensus). Core CPI increased 3.9% (vs 3.7%) consensus. Hourly earnings increased 4.5% as before. Similarly PPI inflation was 2% (vs 1.8% consensus). The market inferred that rate cuts would be further away than previously expected. This was generally negative for the stock market.
Other economic data also weighed on the market in February. This includes continued deflation in China, with CPI falling 0.8%y/y and PPI falling 2.5% y/y. This has adversely impacted China-exposed stocks.