Dan Celia: Fed Rate Cut Impacts Markets in a Strong Economy as Earnings Reports Make News
PHILADELPHIA, Pa.—It’s been a busy week thus far for financial headlines, with the Federal Reserve announcing a rate cut yesterday, along with second-quarter earnings reports and other economic data making news, says Dan Celia, a biblical stewardship authority and nationally syndicated host.
“Unemployment in this country is basically nonexistent,” Celia said this morning. “GDP is good, consumers are spending, consumer confidence is high, and the Fed rate is great. July was very good for stocks, with the Dow up 1%, Nasdaq up 2.1% and the S&P 500 up 1.4%—very good numbers to say the least for one month. But we’ve got other concerns around the markets and one seems to be the sense that the Federal Reserve, which was widely expected to cut rates, wasn’t quite dovish enough for the markets, with Jerome Powell indicating this could be the last rate cut for a while. Many were expecting a rate cut again in September then possibly again in December. But it looks like we’ll see just two rate cuts—the one we got yesterday and another in December.
“The markets didn’t like this, but I don’t think it matters,” Celia added. “I think it’s irrelevant. We’ve got a Wall Street full of people who lived only through 2008 on and think that easy money is the course of doing business. It isn’t. I’ve said it before, but I would have been perfectly happy if the Fed didn’t lower rates at all. I do think Powell is spot on with his expectations of the economy. Even though President Trump may be a bit frustrated right now, let’s maintain our good, strong economy. I’m glad the Fed didn’t indicate that the economy is slowing. Although, of course, we all know the global economy is slowing, but there’s no reason why we have to take a cue from central banks in those economies. Let’s take the cue from our economy, our inflation, our economic data, and keep moving forward.”
Celia continued that second-quarter earnings reports were the other big financial news item this week.
“One of the most important factors to look at in the economy moving forward is this: ‘Are we still in a growing economy?’” he said. “I expect that we are. But let’s not forget about earnings. We are headed toward the heart of earnings season and will be well into it by Friday. As of the beginning of this week, 76% of the 222 companies that reported earnings beat analysts’ expectations. Yes, this is in line with recent trends, but remember all the naysayers who have been wrong for the past five or six quarters as they talked about an earnings recession. This quarter was to be no different, as they said the same thing, primarily due to trade. Right now, it doesn’t look like that will be the case, and these naysayers have already pivoted to the third quarter. Most of them are saying these second-quarter earnings are good because they are pulling from the second half of the first quarter. Maybe so, but when we see numbers like 76% of more than 220 companies beating expectations, things are looking strong.
“Keep in mind that this is in the midst of a trade war, and it was anticipated that the lack of a trade deal would dramatically impact earnings,” Celia added. “Well, it’s been a year now and, so far, no real impact. Let’s hope we can continue the momentum.”
Celia leads Financial Issues Stewardship Ministries (FISM, www.financialissues.org) and focuses on important economic trends and biblical investing during his daily, three-hour program, “Financial Issues,” heard on more than 650 stations nationwide and reaching millions of households on several television networks.
Read more about Celia, FISM and “Financial Issues” here. Visit the Financial Issues Stewardship Ministries web site at www.financialissues.org, its Facebook page, on YouTube at Financial Issues with Dan Celia or on Twitter @financialissues. Download the Financial Issues app here or lean more about FISM.tv.