Breakfast News: Eyes Turn To The Fed
This week's focus is on the U.S. Federal Reserve's interest rate decision, with markets expecting no cuts. Key earnings reports from Nike, Accenture, and Micron Technology are anticipated. Retail sales data for February is also due, with expectations of a rebound. Berkshire Hathaway has increased its stake in five Japanese trading houses, reflecting Warren Buffett's confidence in their business models. Analysts suggest that current crypto market turmoil presents investment opportunities in undervalued DeFi protocols.
Breakfast News: Eyes Turn To The Fed
March 17, 2025
| Friday's Markets |
|---|
| S&P 500 5,639 (+2.13%) |
| Nasdaq 17,754 (+2.61%) |
| Dow 41,488 (+1.65%) |
| Bitcoin $84,036 (+4.2%) |
Source: Image created by Jester AI.
1. Can the FOMC Settle Nerves?
This week sees the latest U.S. Federal Reserve interest rate decision and policy statement, with markets pricing in a 99% chance of no rate cut according to the CME FedWatch tool. Yet recent poor economic data could make Chair Jerome Powell more accommodative in his language on Wednesday.
- "The Fed is in a very tough spot right now": Scott Anderson, chief U.S. economist at BMO Capital Markets, believes the stagflationary outlook alongside tariff uncertainty makes it difficult for the Federal Open Market Committee to make accurate monetary policy decisions.
- The "Powell Put"?: Investors will be hoping the updated dot plot shows more than two cuts for the year as previously expected, with Powell using supportive language around helping the economy as needed. Such a move could boost stocks off recent lows, with some referring to the move as the 'Powell put'.
2. Key Earnings to Watch This Week
Stock Advisor recommendation Nike (NKE -1.35%) will report quarterly earnings after the market closes on Thursday. It's likely too early to see any material progress on the turnaround for new CEO Elliott Hill, with sales and profits both expected to decline.
- Recommended for 'Cautious' investors in Hidden Gems: Before the market opens on Thursday, Accenture (ACN 0.55%) will drop Q2 results. Investors will be closely watching for growth in revenue from the consultancy area of helping clients implement generative AI in their businesses, which did well last quarter.
- Beating the S&P 500 across the last 5 years: Micron Technology (MU 6.23%) will also report on Thursday, with attention on the speed of adoption of Micron's high-bandwidth memory (HBM) products in AI applications. Part of the short-term rally is down to the anticipation of strong earnings.
3. "Real Crypto Bargains To Be Had"
Bernd Schmid, Fool Analyst
Crypto is on one of its wild downhill rides again. Rest assured, this turmoil is a treasure trove for Fools who, like the Digital Explorers team, see crypto succeed.
Especially many DeFi protocols – which generate real revenue, often boosting token buybacks – are objective bargains right now. artemis.xyz lists 22 protocols with P/S ratios under 10. Many of those will likely fail, but those that endure have massive growth potential
In a few years investors might just be kicking themselves for overlooking such bargains.
4. Next Up: Macro Matters
Retail sales data for February is due today, with expectations of a monthly 0.7% gain following the 0.9% fall from January. A bounceback following the worst print since March 2023 would go some way in alleviating investor concern.
- Last month's data skewed by severe weather events: A high print can be viewed as a sign the consumer is doing well, being one of the last major data releases members of the FOMC will have before their meeting begins.
- Property as a leading economic indicator: The property sector is also in focus today, with the NAHB housing market index for March providing a steer on homebuilder confidence.
5. Berkshire Increases Japanese Exposure
Regulatory filings show Berkshire Hathaway (BRK.B 2.05%) has raised existing holdings in five Japanese trading houses. After first investing back in 2020, Warren Buffett has been an outspoken fan of the diversified business models from the conglomerates.
- "Over time, you will likely see Berkshire's ownership of all five increase somewhat": After addressing the investments last month in his annual shareholder letter, Berkshire's stake in Mitsui & Co increased from 8.09% to 9.82%, with similar jumps in the likes of Mitsubishi Corp and Sumitomo Corp.
- "Sogo Shosha" stocks: The companies speak to Buffett's investing style, with a competitive advantage in traditional (and proven) sectors with well-run management teams.
6. Foolish Fun
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