Week in a Glance: Aggressive Fed, US GDP, Reporting season

31 янв. 2022 г.

Even despite Friday, the past week can hardly be called successful for risky assets. Rather, she just managed at the last moment not to become a failure. The S&P 500, meanwhile, is gearing up for its worst January ever.

Formally, the main reason for buyers' pain was and remains the US Central Bank, which was very aggressive last week, announcing the end of the quantitative easing program in early March, followed by a rate hike, which in turn will be followed by a reduction in the Fed's balance sheet. In general, inflation is the No. 1 goal and priority for the Central Bank, and it is ready to use all available tools.

And the Fed can be understood. Inflation at the highest level in 40+ years. But at the same time, GDP is growing at a pace not seen since 1984, which gives the Central Bank room to maneuver.

In this regard, the current week will be quite interesting, at the end of which data on the US labor market will traditionally be published. If the NFP does not fail, then the Fed will get a complete card blanche to tighten monetary policy.

The reporting season, which could have saved the situation on the US stock market, is still causing rather mixed feelings. It seems that there is Microsoft and Apple with their excellent reporting. What are at least $ 123.9 billion in quarterly income of an apple company.

On the other hand, the heroes of last year Tesla, Robinhood and others like them no longer inspire. And if Robinhood was consistently a failure in both reporting and forecasts, then Tesla posted more than decent financial results. But it confirmed the main fears of the markets associated with any car company - a shortage of chips in 2022 could hit Tesla hard.

Well, the reporting of a number of companies, such as McDonald's, reminds everyone of another problem - the growth of producers' costs, which must be taken on and sacrifice profits or try to pass it on to consumers and risk losing market share. Such a lose-lose situation.

Alphabet, Amazon, Meta Platforms, Merck, Exxon Mobil, as well as Ford and General Motors, to name a few, will give food for thought this week in the form of reporting.