The big surprise for the week is that Fed Chairman Jerome Powell decided to stay on the Federal Open Market Committee () as a Governor when Kevin Warsh takes over as the new Fed Chairman in May. The has an 8 to 4 vote, with three hawks and one dove dissenting from the official statement that telegraphed a possible key cut. Due to a divided FOMC, it appears that Kevin Warsh will have to work hard to get all the FOMC members to achieve a consensus.
If there’s any risk out there, it’s the bond vigilantes. They are the ones trying to push up government bond yields, which they have been doing in Japan, Britain, and France. In my opinion, long-term treasury bonds are not the best investment. They yield a lot, but when yields meander higher, your principal erodes. Treasury Secretary Scott Bessent will have to figure out how to get rates down in order to stimulate the economy. GDP growth for the first quarter came in at 2%, but I think it’s going to be revised higher.
The market has been overpowered by good earnings, and the data centers are clearly the big winners. posted a 5.7% revenue surprise and a 17.2% earnings surprise. The company also raised its quarterly guidance above the analyst consensus estimate, which got investors very excited. and also beat analyst estimates and gapped higher this week and reinforced that data center-related stocks continue to lead the overall stock market.
is reporting earnings after the close today. For disclosure, my wife owns the stock in her personal account. I’m expecting Apple to have good results. The main thing about Apple is its new iPhone, which will be announced in September and is expected to be a hit. So, I’d encourage investors who own Apple stock to hold it until at least the iPhone announcement in September.