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Charles Schwab Corp SCHW

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Morningstar’s Analysis

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5-Star Price

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Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Fed Holds Rates Steady, No Hints of Tapering, Still Views Inflationary Build Up as Transitory

Eric Compton, CFA Senior Equity Analyst

Analyst Note

| Eric Compton, CFA |

In its latest statement, released on April 28, the Federal Open Market Committee unsurprisingly held the federal-funds rate at 0.0%-0.25%. Nobody expected a change in rates this meeting, and there were no new economic projections released, therefore, this was arguably a low-key event. Instead, the focus remains on any changes in the Fed’s language in the release and any hints at balance sheet tapering. There were no hints at tapering, and we don’t expect even a hint at tapering until the economic recovery is well on its way, at least for a couple more months--and we expect that any actual tapering will be telegraphed well in advance. The key debate today is how high inflation will get, if it will be transitory, and how long the Fed will hold off on rate hikes as inflation progresses. Based on our read of the Federal Reserve's most recent statements, we don’t plan to make any changes to our current rate forecasts in our U.S. bank models, although we admit that the risks to inflation seem to be toward the upside, and therefore rates hikes could happen sooner in a hotter environment.

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Company Profile

Business Description

Charles Schwab operates in the brokerage, banking, and asset-management businesses. The company runs a large network of brick-and-mortar brokerage branch offices and a well-established online investing website. It also operates a bank and a proprietary asset management business and offers services to independent investment advisors. The company is among the largest firms in the investment business, with over $6.5 trillion of client assets at the end of 2020. Nearly all of its revenue is from the United States.

Contact
211 Main Street
San Francisco, CA, 94105
T +1 415 667-7000
Sector Financial Services
Industry Capital Markets
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2019
Stock Type Cyclical
Employees 32,000

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