đ¨ Daily Scoop: The Fed’s Gift
By Thu, Oct 31, 2019
Hey Scoopers,
Wednesday’s wait-and-see mode turned into a mini celebration as investors got the interest rate cut they were expecting. Even a small celebration was enough to push the S&P 500 index to another record-high.
Beyond the overall market, a company that most people assume is dead keeps surprising the market. On the other hand, the short-term thinkers of the market assumed its a good idea to sell off a well-managed and growing stock, just because of a forecast adjustment.
Oh, by the way, only one day left for you to tell us about your spooky tickers. If you had one stock that spooked you so much in 2019 that it deserves to become a Halloween costume, what would it be? Let us know by Thursday. Friday’s edition of The Daily Scoop may feature you and your ticker.
Scroll down to the “Overall Market,” “What’s Up?” and “What’s Down?” sections to learn more.
MARKETS
- U.S. markets: All three indices changed their direction on Wednesday and inched up into the green zone. Scroll to the “Overall Market” section to learn more.
- Cryptocurrency: Not much is happening in the Bitcoin-land. Bitcoin’s price continues to hover in the mid-$9,000 range..
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OVERALL MARKET
Another record-high
What happened on Wednesday?
The day started grimly. All three indices were gyrating, mostly downward. However, when the announcement came, and the Fed’s cut the interest rate another quarter of a point, the mood changed.
The excitement was just enough to push the S&P 500 index to another record-high. It’s funny how amidst fears of a recession and a market correction, we keep hitting record-high levels.
Will there be more cuts?
As of now, the Fed’s Chairman doesn’t see any additional cut likely. He talked about the Fed is now at its target inflation rate. Any further interest rate cuts will only be justified if there is a significant hike in the inflation rate.
Interestingly, Chairman Powell also talked about the need for innovation in the monetary policy framework. He and his colleagues are reviewing the framework they use to make monetary decisions. For example, whether the current inflation rate target is appropriate or not can be a part of such changes in the decision-making framework by the Fed.
Such a review will take months to complete, and it won’t have an immediate implication for us. However, this is interesting to monitor. There are several new schools of thought emerging in the field of macroeconomic, including the emergence of the Moden Monetary Theory. Exciting times to be an economist or be interested in the topic.
WHAT’S UP
Is this company still alive?
So, what happened?
Shares of Garmin (Ticker: GRMN) were up more than 9.5% on Wednesday. Of course, who can forget the old Garmin GPS helping drivers navigating the world? However, with the emergence of map applications on our smartphones, almost everyone assumed Garmin would go away. But, the reality is far from it.
Garmin smashed the market’s quarterly earnings expectations. The company continues to build navigation hardware and software for several niche markets above and beyond your usual street navigation. Year-to-date, and in the past 1, 3, 5, and 10 years, the company has outperformed the market.
WHAT’S DOWN
The market is such a short-term thinker
Shares of Twilio (Ticker: TWLO) were down more than 11% on Wednesday. Twilio is a cloud-based platform that enables companies of all sizes to develop and manage their text and voice communications. Some people call Twilio the new Cisco (Ticker: CSCO).
In its latest quarterly earnings report, the company surpassed the market’s expectations. However, it adjusted its overall forecast for the year. And, the short-term thinkers of the stock market thought its a good idea to sell the stock.
WATER COOLER
One more day left
So, what happened?
We are working on a spooky edition of The Daily Scoop, landing in your inboxes on Friday. If you’d want to join us celebrating Halloween, investor style, you’ve got to reply to this email with one ticker that spooked you in 2019 so much that it deserves to be a Halloween costume.
Reply to this Daily Scoop and let us know. You have until Thursday to share your spooky tickers. Go ahead, do it now.
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
