The Fed And The Furious 🏛️

Did you know that the Federal Reserve operates under a dual mandate to promote maximum employment and stable prices, balancing these goals when setting interest rates?

Given the need to balance these two aspects, it shouldn’t surprise anyone how slowly the Fed makes up its mind.

Here's a quick tour through the current economic landscape:

• More Bank Stress: First, we’ll take a look at the banking sector, focusing on New York Community Bank's recent financial maneuvers and the FDIC's report on bank health 😵‍

• The Fed’s In No Rush To Cut: Next, we’ll give you insight into the Federal Reserve's measured approach to policy adjustments, considering economic indicators and market performance 🐌

• Nvidia On The Move: Finally, Nvidia's challenge to Apple's market dominance exemplifies the tech sector's growth and investment potential 🖥️

Explore these economic insights to sharpen your trading strategies and gain a clearer view of the market's twists and turns.

More Bank Stress 😵‍

Nervousness over New York Community Bank (NYCB) seems to be behind us for now following the announcement of a $1bn capital raise for the bank that should give ample cushion to backstop possible loan losses from the bank’s real estate portfolio.

The Federal Deposit Insurance Corporation has stated that the number of weak US banks had risen by eight to 52 banks in the final three months of 2023 📈

The total assets of all the banks on the problem bank list at the end of last year was $66bn, or about 0.2 per cent of the overall banking sector.

So while the overall banking system remains strong, we are likely to see more regional banks run into some difficulty 😱

The Fed’s In No Rush To Cut 🐌

There is a strong consensus at the Fed for a wait-and-see approach to policy as they sort through data which continues to point to a tight labor market, a strong but slowing economy, inflation which is slowing more gradually than a few months ago, and a booming stock market.

If it weren’t for a blisteringly hot stock market which is already up 7.3% on the year (S&P 500), the Fed might be sending clearer signals that a rate cut is on the way 📢

But the combination of reasonably strong GDP growth and a relentless stock market allow the Fed plenty of time to assess incoming data to ensure inflation is well on the way to sustainably hitting the Fed’s 2% inflation target 🎯

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Nvidia On The Move 🖥️

Nvidia stock continues its run higher.

The artificial-intelligence chip maker surpassed Saudi Aramco to become the world’s third most valuable company earlier this week and it already has Apple in its sights 🚀

The stock’s market capitalization is $2.22 trillion compared to Apple’s market value which has dipped to $2.61 trillion.

The gap is still considerable—just under $400 billion—but it’s the closest the two companies have ever been.

At the beginning of the year, Apple was worth $1.33 trillion more than Nvidia, according to FactSet data.

A year ago, the gap was $1.83 trillion.

The divergence in the performance of the two stocks has been more pronounced in 2024—the iPhone maker has fallen 12% so far this year, compared with the chip maker’s 79% increase 📈

Inner Circle Macro Update 🔍

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