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What to expect from the Fed, other than not much

Jul 26, 2023

Good morning! 👋

It’s Fed Day and, once again, futures are down as traders wait to see what Team Powell has to say about raising rates.

We’ve seen this play so many times that we’ve memorized the lines.

My advice?

Turn off the sound; the Fed meeting will make a great substitute for Animal Planet! 🤦‍♂️

Here’s my playbook.

What to expect from the Fed, other than not much

Fed Chair Jerome “JPow” Powell will unveil yet another rate decision later today. Fed fund futures presently have the odds at 98% and rising for 25 basis points (or “bips” in Wall Street speak).

What you really want to pay attention to is any commentary about a) whether or not Team Powell sees inflation moderating, and b) whether or not he sees an end to rate hikes or at least a pause.

My guess is that he’ll spend a lot of time jawboning about the same old schtuff, which is why I’m going to spend my time today hunting for opportunity.

REMEMBER—the markets have a very defined upside bias over time, so it makes sense to concentrate on that playbook (which you can control) versus the Fed (which you cannot).

MSFT: Analysts get it wrong again

If I’ve said it once, I’ll say it 1,000 times.

Earnings season is a farce.

Microsoft beat top and bottom line but made a “lighter than expected” revenue projection, which is being billed as disappointment by the cognoscenti.

Don’t fall for it.

Do you think analysts really know Microsoft better than CEO Satya Nadella knows Microsoft?

The answer is no.

Analysts fan the media, and the media fan the public’s emotions, which is why the herd almost always overreacts to what’s happening.

Investing success requires discipline and keeping your emotions out of the equation.

The real news is that Microsoft also noted that AI services would have a bigger impact on revenue in the second half of the fiscal year that just started.

That’s practically an engraved invitation.

Just sayin’…

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Coke: A double beat + higher guidance 😊

Anybody who’s worried about the consumer and inflation isn’t looking in the right places.

Coke beat top and bottom line while also raising 2023 guidance. (Read)

CEO James Quincey observed that customers are willing to pay a little more for the company’s beverages.

Ya think??!!

To a point I’ve made repeatedly, the best companies will continue to plow ahead, and investors who are on board are far more likely to reap the rewards over time than those who are not.

Big Tech, BTW, is a lot like soft drinks, for reasons I laid out in this YouTube Short. (Watch)

Are you paying attention, FTC?

The FTC has made no bones about trying to slam down on Big Tech for anti-competitive practices, block deals, and the like.

They’re barking up the wrong tree.

Competition is alive and well, even at the very top of the proverbial food chain.

Case in point, Meta, Microsoft, and Amazon are teaming up on a maps project to dethrone Apple and Google’s maps dominance. (Read)

Strange bedfellows, I know, but it proves my point in spades.

Could Apple have eyes on Palantir?

I’m known for making bold predictions that, in the words of a longtime reader in London, have the annoying habit of being “closer to the mark” than he’d care to admit.

Try this on for size.

Palantir has applied for a new AI-powered search engine that can “scan data from different sources, make sense of it, spot and resolve any conflicts, then remove any duplicates before storing it.” (Read)

That catches my attention because of two earlier and related Palantir patents—11681694 and 11683394—which are associated with “systems and methods for grouping and enriching data items accessed from one or more databases for presentation in a user interface” and “systems and methods for isolating applications associated with multiple tenants within a computing platform,” respectively. (Loads of Palantir Patents)

I know that’s a lot of tech gobbledy-gook at this hour of the morning.

Hang with me or grab another cuppa coffee if needed.

Ask yourself who just debuted the world’s first spatial computer, which, presumably, will need to do all that and more?

Apple.

It’s not a stretch to put the two together at some point down the road, to my way of thinking.

That’s because a) Apple Vision is intended to “seamlessly blend digital content with the physical world” and b) Palantir’s patents appear intended to parse data that aids, generates, and uses criteria to analyze clustered data structures in various user interfaces.

Hmmm.

I hope I am smart enough to buy more.