Fed is Still in Denial, and Giants Publish Reports

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As of this morning, almost everyone from FAAMG has reported with the exception of Amazon. The reporting was excellent, as expected. Double-digit revenue growth, sharply outperforming earnings forecasts - so much more to wish for.

Not surprisingly, investor sentiment in the stock market has changed again. This was facilitated by a respite in a bloodbath in the Chinese stock market, as well as statements from the Celestial Empire that they still allow IPOs of Chinese companies in the United States (recall that it was China's dissatisfaction with an IPO in the United States that was one of the main reasons for the outbreak of the stock market massacre)...

But it was far from complete calm, if only because everyone was apprehensively awaiting the results of the meeting of the Federal Reserve Committee on Open Market Operations. Recall that the latest inflation data drove the Central Bank into a corner. Well, how they drove. If we ignore inflation statistics, as the US Central Bank has done in recent months, then they have not been driven at all.

Yesterday's results showed that the Fed is still at the stage of denial and has not made any progress towards the stage of adoption. Judging by the text of the final FOMC statement, one of the fastest economic recoveries in the history of the United States is still classified as "the economy is showing signs of improvement, but has not yet recovered."

And there is no need to talk about inflation at all - it is still ignored by the Central Bank. Or not even worse. The Fed believes that inflation in the long term has not yet reached the target of 2% (they wrote this in all seriousness in the communique) and the Fed (it turns out) is doing everything possible to accelerate it to this very 2%. Let us recall the latest figures: consumer inflation 5.4%, industrial inflation - 7.3%.

It is not surprising that with such a picture of the world, the Fed did not even think about raising the rate yesterday or even adjusting the parameters of the quantitative easing program.

The reasons for this blindness are generally obvious. The Fed is afraid of the bursting of bubbles that could bury financial markets and the financial system as a whole. And they pull the rubber to the last. Judging by the reaction of the US stock market to the results of the FOMC meeting, they are doing very well.

Among other news, it is worth noting the return of the dynamics of oil reserves in the United States to its usual course. According to the EIA and API, they fell again, recalling the shortage in the oil market. However, buyers were not strongly inspired and oil continued to drift near the top.

As for today, in addition to Amazon reporting, we are waiting for preliminary data on US GDP for the second quarter. The data will most likely be great. But they still do not answer the main question. And it sounds like this: "What will happen next?" It is likely that the pace of economic recovery is at its peak. And everyone roughly guesses what follows the peak. But I don’t want to think about it yet. But you have to. So we also follow the jobless claims figures as the most efficient available indicator of US economic statistics.