Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Jeremy Glaser and Christine Benz | 01-29-2016 06:00 AM

Friday Five: Fed Grows Cautious, Facebook Flies

A March rate hike seems slightly less likely, following the Fed's comments this week. Plus, our read on Facebook, Apple, Boeing, and P&G earnings.

Christine Benz: Hi, I'm Christine Benz for Welcome to The Friday Five. The Federal Reserve sounded a cautious note in its statements this week. Joining me to discuss this and other market and economic news is Morningstar markets editor Jeremy Glaser.

Jeremy, thank you so much for being here.

Jeremy Glaser: You're welcome Christine.

Benz: Let's discuss the Fed's most recent statement; it did sound a cautious note. Let's talk about that and what it means for a potential rate movement in March.

Glaser: No one expected the Fed to move rates at this January meeting after raising rates in December. But we were interested to see what they had to say about the state of the economy. The Fed said they are seeing a slowdown, which is something we haven't heard them talk about in a long time. They said they are very carefully looking at what's happening abroad and seeing what impact it's having on employment and inflation. It's obviously something they are worried about [and could pose] a risk to their outlook.

They left the door open to increase rates in March. They certainly are open to doing that if the economic data continues to look pretty strong. Let's say we have a few good jobs reports or core inflation starts to look a little bit better. But it's not a done deal yet. If you look at what the market's predicting, [market watchers] don't expect rates to be increased in March. They think the Fed is going to be forced to wait--maybe we aren't going to see four increases this year, which is what the Fed was saying was going to happen as we entered 2016.

So, obviously a very cautious note here. [A rate increase is] still a possibility, but it seems like a March rate hike seems slightly less likely, given what's going on in the world right now.

Benz: Some market watchers, I know, are even looking back to December's rate move and saying, maybe the Fed was a little too aggressive there.

Glaser: It's always hard to say exactly what would have happened if they hadn't raised rates. Would we would have seen this type of volatility? We very well may have, given that the issues in China probably aren't super-dependent on it.

But certainly a tightening Federal Reserve and the divergent global central bank policies is part of what's driving this. I think that's why the Fed is being so cautious now and being very clear that they want to have a very slow path of increases, that they are willing to be patient and wait to make sure another increase doesn't create even more problems.

Benz: Turning over to earnings news. Facebook stock popped after issuing some decent earnings during the quarter.

Read Full Transcript

{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article