Win McNamee
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Fed can afford to be ‘careful’ with policy due to strong US economy, Powell says. (00:30) Snap has started new round of layoffs – report. (01:58) Palantir (PLTR) Q4 earnings preview: Big expectations from commercial division. (02:56)
This is an abridged transcript of the podcast.
Federal Reserve Chair Jerome Powell appeared on “60 Minutes” on Sunday.
His comments are drawing some attention.
We’ll focus on the fact that the odds of a rate cut in March have gone from 40% at the end of Friday to 15% following his comments.
So, what did he say to cause such a stir?
“The labor market is strong — 3.7% unemployment — with the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully,” he said.
He went on to say that if the Fed cut rates too soon, inflation would settle above the Fed’s 2% goal. If it moves too late, that could lead to a recession.
“Inflation has come down sharply in the past six months,” he said, adding that the central bankers want to continue to see more evidence that inflation is moving down before they move to loosen policy. That echoes comments he made at his press conference on Wednesday, when the Fed kept its policy rate at 5.25%-5.50%.
Powell admitted that it would have been better if the Fed had tightened policy sooner when inflation surged in 2021.
He was also clear to point out that the easing of inflation doesn’t mean the overall price level will come down. “I can’t overstate how important it is to restore price stability by which, I mean, inflation is low and predictable and people don’t have to think about it in their daily lives”.
While Powell has said he expects the Fed to cut rates later this year, a presidential election year, he said they are not concerned with politics. Rather, the central bank is focused on economic data, he said.
Snap (NYSE:SNAP) laid off dozens of employees on Friday, according to a report from Business Insider.
The report cited two people familiar with the company. One person said that employees are bracing for more layoffs as the company reports earnings.
BI reported that there was no company wide announcement about the layoffs.
Snap reports earnings on Tuesday, with an outsize post-results move priced in by options.
Deutsche Bank recently upgraded SNAP to Buy from Hold with a $19 price target, citing better advertising trends, the growth of Snapchat+ and the partnership with Amazon (AMZN) benefiting the Evan Spiegel-led tech company.
On our catalyst watch for the day,
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The World Defense Show will continue in Saudi Arabia. Companies scheduled to participate include General Dynamics (GD), BAE Systems (OTCPK:BAESF), Lockheed Martin (LMT), Airbus (OTCPK:EADSF), Boeing (BA), Northrop Grumman (NOC), and L3Harris (LHX).
Palantir Technologies (NYSE:PLTR) is on our earnings watch for the day. The company is scheduled to report fourth-quarter earnings today after market close.
Analysts expect a year-over-year increase in both the top and bottom lines, with earnings per share of $0.08 on revenues of $602.8 million.
Investors expect Palantir to report robust numbers from its commercial division, with commercial revenue growth driving upside to overall revenue. Palantir’s (PLTR) commercial division represents about one-fifth of its sales.
However, Palantir’s (PLTR) overall growth is expected to lag rivals Snowflake (SNOW) and Databricks, due to “widening cracks in the firm’s U.S. government, international government, and international commercial businesses”, according to investment firm William Blair.
Analysts see the company’s government and international commercial segments weighing on its fourth-quarter results.
Other articles to look out for on Seeking Alpha:
Earnings week ahead: Alibaba, PepsiCo, Disney, Palantir, McDonalds, Ford and more
AI may be much more than a buzzword for Shopify
Watch this restaurant stock for a near-term bounce
The major market averages were able to close out Friday’s trading session well into the green and push up to new record highs as investors fought through a stronger than expected nonfarm payrolls report.
The Nasdaq (COMP.IND) was the best performing index as it closed higher by 1.7%. Next in line was the S&P 500 (SP500) which concluded higher by 1%. The (DJI) ended up 0.3%.
Six of the 11 S&P sectors were able to advance on Friday but were led higher by Communications Services, Consumer Discretionary, and Tech.
Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the red. The Dow is down 0.2%, the S & P 500 is down 0.1% and the Nasdaq is down 0.1%. Crude oil is down 0.6% at less than $72 per barrel. Bitcoin is up 0.1% at more than $43,000.
In the world markets, the FTSE 100 is up 0.4% and the DAX is up 0.2%.
The biggest movers for the day premarket: NanoString Technologies (NASDAQ:NSTG) is down 36% after the company and certain subsidiaries voluntarily initiated a chapter 11 restructuring proceeding in the United States Bankruptcy Court for the District of Delaware.
On today’s economic calendar:
2:00 pm Atlanta Federal Reserve Bank President Raphael Bostic will give welcome remarks before the virtual “Uneven Outcomes in the Labor Market” conference hosted by the Federal Reserve Board of Governors.
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