Apple gives Fed food for thought

January 27, 2016

All eyes will be back on the Federal Reserve today as they make their first interest rate decision and monetary policy statement of the year but there are no economic projections or press conference this time round, which come at the next meeting in March. We’ve seen a rise in risk appetite in this final week of January which so far has been a bit of a blood bath, although the recovery from lows in many indices has softened the blow for many investors. This has come as a result of a bounce in oil prices but also a growing expectation that central banks will have to do more to support the global economy. Today’s Fed meeting as a result is likely to see a more dovish tone to it, especially since the market consensus is that we will see fewer rate hikes this year than the Fed is currently pencilling in.

Even though we saw a higher than expected rise in US consumer confidence yesterday a big warning shot has come from one of the world’s largest companies Apple which saw its first fall in revenue since 2003. The fact that Apple’s shares have declined some 20% in the last 6 months shows how the current equity bear market really did start in the middle of 2015 and it comes as no surprise that the main concerns are a result of a slowdown in emerging markets, in particular China which is the company’s second biggest market. This could allow for a short term continuation in the recovery in risk appetite and at the same time causing the dollar to face some headwinds.

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