FED MEETING CONCLUDES TODAY

Equity markets declined yesterday on mixed earnings.  Disappointing results from both Alphabet and Samsung overshadowed stronger than expected profits from GE and Pfizer.  Oil rose on Venezuelan unrest, Saudi Arabia signaling a possible extension of production cuts to the end of the year, continued disruption from contaminated oil from Russia and Nigerian unrest.

In many ways it feels as though oil is on the verge of a geopolitical narrative changing melt up and the must own technologies trading back to reality.

Speaking of which, analogies are arising between 2000 and today.  Nineteen years ago “the Four Horsemen” was a household name referring to the unrelenting advance of Intel, Microsoft, Dell and Cisco.  Today it has been replaced by FAANG.

FAANG traded around an 84% premium to the index while the four horsemen traded at a 65% premium, up from 4% from the mid to late 1990s according to Bloomberg.

Change is the only constant.  What has changed is the velocity of change.

Today is the conclusion of the Fed meeting.  No change in policy is anticipated but all are expecting a continuation of the dovish narrative.

Speaking of which, one month ago it seemed like every other story was about the inverted yield curve.  On little fanfare, today the curve is quickly steepening.  Will the Fed make any comments about a radically different bond market than that of one month ago?

Last night most of the foreign markets were closed for May Day celebrations.

The Dow should open moderately higher on earnings and ahead of the outcome of the Fed meeting which is expected to come to a dovish conclusion.   The 10-year is up 1/32 to yield 2.50%.

kent
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.