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Wall Street’s biggest enemy is uncertainty, and investors are feeling it keenly right now. They expect the Federal Reserve to resolve the situation on Wednesday.
Investors actually very It is certain (nowhere) what the interest rates will be this month. About 99% of them think interest rates will remain unchanged at 5.25%, according to the CME FedWatch tool.
The next few months are uncertain.
Investors are hoping for some clarity from the Fed’s economic outlook, which is released alongside its official policy statement. The problem is that if that guidance doesn’t match what they want, the market can become unstable.
what’s happening: The past few months have been tough for Fed watchers.
Economists, analysts and traders of all stripes started things off in December by predicting that policymakers would cut interest rates six times this year. At the time these optimistic forecasts were made, inflation was steadily declining and Fed officials seemed ready to draw their sword and cut rates.
That’s no longer the case.
Recent hawkish comments from Fed Chair Jerome Powell, combined with a series of better-than-expected inflation reports, have dampened Wall Street’s dreams of lower interest rates.
Forecasts for the first interest rate cut in two years were postponed to May, then to June. Right now, there’s pretty much no consensus on whether it’s June or July. Uncertainty is prevalent.
“While inflation has solidified in recent months, we believe it is still on track to fall sufficiently for the first rate cut by the June FOMC meeting,” Goldman Sachs analysts said in a note this week. ” “However, this is becoming less obvious and the inflation path for the rest of the year is now within the range where small surprises can have large consequences.”
Goldman analysts have also lowered their forecast for rate cuts this year to three (up from five to four in late February).
How the Fed can help: Enter the Fed’s quarterly economic forecast summary. This includes what is colloquially known as a dot plot.
If the Fed has changed its mind about when to lower interest rates, it’s because each of the central bank’s 19 officials has indicated (in a series of points) what direction they expect future rates to go. This graph will make it clear.
Investors are paying close attention to these forecasts for information on the path to rate hikes. A change in plans would signal to investors that the Fed may plan to change the way it approaches interest rates.
The Federal Reserve’s official policy statements represent an agreement among the Boards of Governors of the Federal Reserve System. But this additional data allows investors to peek inside and see what’s going on behind the scenes.
David Kelly, chief global strategist at JPMorgan Asset Management, said if just the two Fed officials were to become a little more hawkish, “the forecast for three rate cuts in 2024 would shrink to two.” This is important because it would disrupt the schedule and the market at the same time.” , in this week’s note.
This plot often highlights the difference between what investors think will happen and what the Fed thinks will happen. So if the Fed expects fewer interest rate hikes in the future, bond yields will likely rise and markets will likely fall.
Wednesday’s dot plot could pose a “danger” to the market, Kelly warned.
Chipotle’s board of directors announced Tuesday that it has approved a 50-for-1 stock split, my colleague Samantha DeRuya reported. The company called it one of the largest stock splits in New York Stock Exchange history.
This means that each Chipotle share, worth $2,797.56 as of Tuesday’s stock market close, could be split into 50 shares, subject to shareholder approval, effectively reducing the cost of investing in the company.
Companies often decide to split their stock when they believe the price per share is too high for the average investor. Chipotle Chief Financial Officer Jack Hartung said in a statement that the split will make the stock more “accessible.”
“This is the first stock split in Chipotle’s 30-year history, and we believe it will make our stock more accessible to a wide range of investors, not just our employees,” Hartung said.
However, a split has not yet been agreed upon. The company plans to put the stock split decision to a shareholder vote on June 6th. If approved, Chipotle’s cheaper stock would begin trading on the market June 26.
Investors appear to be welcoming the possibility of a split, with Chipotle’s stock up nearly 5% in after-hours trading Tuesday.
The announcement comes as Chipotle stock is trading at all-time highs.
Ben & Jerry’s and Magnum become the core of an $8 billion ice cream company
The world’s largest ice cream business is going it alone, CNN’s Hannah Giardi reports.
Unilever on Tuesday announced plans to spin off its ice cream division as part of a drive to expand sales. Profitability will also decline, which will also require a reduction in the workforce of around 6%.
After a century of efforts, Unilever now dominates the global ice cream market and its brands are on sale. In the world. “After the separation, Unilever will become a simpler and more focused company,” the company said in a statement.
The newly formed company will house five of the world’s 10 best-selling ice cream brands: Magnum, Ben & Jerry’s, Briar’s, Wall’s and Cornetto.The combined sales of these and Unilever’s other ice cream brands are Last year it was 7.9 billion euros ($8.6 billion).
Unilever CEO Hein Schumacher told reporters: “The future growth of Unilever and Ice Cream is best served by separating the businesses.” He pointed to the “unique characteristics” of ice cream, including seasonal demand and a supply chain that must be able to support frozen products.
Under its growth plan announced in October, the UK-based company was “committed to doing less, doing more, with more impact,” Schumacher added in a statement. “The changes we are announcing today will help accelerate that plan.”
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