AAP Podcast: Fed Day, February 1, 2023

We’re following up on our initial comments regarding the Federal Reserve increasing the fed funds rate by another 25 basis points exiting its policy meeting today and the comment it sees “ongoing increases” ahead with a shorter-than-usual podcast conversation between Chris Versace and Todd Campbell, editor of StreetSmarts. The two conclude that with Fed Chair Powell sharing we are still in the early stages of seeing inflation move lower, we likely have a few 25-basis point rate hikes ahead of us. However, Chris and Todd discuss why the stock market reacted favorably to the policy statement and Powell’s comments touching on the dollar, recession expectations, the forward-looking nature of the stock market, and a few other things. For example, the recent decline in 10-year Treasury yields has taken some pressure off stock market valuations, but it's also more deeply inverted the yield curve, increasing recessionary risk. They also talk quickly about how the stock market is reacting to the current earnings season so far and how that has them thinking about one sector in particular.