Michelle ThompsonMajor U.S. stock indexes extended their winning streak into the fifth consecutive week on Friday, buoyed by robust corporate earnings and gains in the tech sector. Despite efforts by Federal Reserve officials to temper expectations for numerous interest rate cuts this year, investors remain bullish, anticipating four to five cuts in 2024 according to the CME FedWatch Tool, even though Fed officials have suggested there may be only up to three. This disparity in expectations is raising concerns among economists and traders.
Market performance has been impressive, with the S&P 500 surpassing the 5,000-level milestone last week and the Nasdaq approaching its previous peak of 16,057. Moreover, the U.S. economy continues to show resilience, with the unemployment rate holding steady at 3.7% in January, marking the 24th consecutive month below 4%.
However, the distinction between a soft landing, characterized by easing inflation and sustained economic strength, and a recession is narrow. The Federal Reserve is treading cautiously as it navigates the next steps to ensure a smooth economic transition. While signaling possible interest rate adjustments later this year, the Fed suggests any changes are unlikely before spring or summer.
Despite the market’s optimism, there’s a more than 50% chance that the Fed could adjust rates faster than anticipated or even consider rate hikes, according to Torsten Slok, chief economist at Apollo Global Management.
Economists are expressing concerns about the Fed’s monetary policy, with over 20% of respondents in a recent survey by the National Association for Business Economics deeming it “too restrictive,” the highest level since mid-2010. Such sentiment suggests fears that keeping interest rates elevated could stifle economic growth, risking recession.
Investors also exhibit uncertainty, evident in indicators such as rates volatility and swaption volatility, which remain high relative to the VIX. Despite apparent market stability, underlying unease persists regarding the Fed’s future actions.
Upcoming events, including a busy week of Fed speakers and the release of the January Consumer Price Index, will likely provide further insight into market sentiment and inflationary pressures. Any indication of higher-than-expected price increases could fuel uncertainty in the markets.
Super Bowl LVIII has achieved a remarkable milestone, setting a new ratings record with an astounding 123.4 million viewers.
My colleague Olivier Darcy reports that Super Bowl LVIII has become the most-watched television broadcast in a generation. CBS announced on Monday that Sunday’s thrilling overtime matchup between the Kansas City Chiefs and the San Francisco 49ers averaged 123.4 million viewers, breaking previous Super Bowl viewership records.
This highly anticipated showdown in Las Vegas surpassed the viewership of last year’s Super Bowl, which set a record when the Kansas City Chiefs staged a second-half comeback against the Philadelphia Eagles in front of 115 million viewers. The audience for Super Bowl LVIII was so substantial that it approached the viewership of the all-time most-watched television broadcast in 1969, when an estimated 125 to 150 million viewers watched the Apollo 11 moon landing.
The record-breaking Super Bowl marked the culmination of a successful season for the NFL, which had already surpassed viewership records in the weeks leading up to the epic conclusion at Allegiant Stadium. The NFC championship game on Fox averaged 56 million viewers, while the AFC championship game on CBS averaged 55 million viewers.
Given these impressive numbers, the NFL and the Super Bowl have become even more valuable to advertisers seeking to reach a broad audience. Companies spent around $7 million to secure a 30-second commercial spot during the big game.
With cocoa prices on the rise, there’s concern about its impact on Valentine’s Day chocolate.
According to CNN’s John Towfighi, cocoa prices are surging so high that even major chocolate manufacturers are struggling to maintain profitability, which could spell trouble for consumers’ wallets this Valentine’s Day.
Last Thursday, Hershey Co. announced plans to reduce its workforce by 5% due to historic cocoa prices and cautious consumer spending amid inflation concerns, which impacted its fourth-quarter earnings.
Climate challenges in West Africa, where over 60% of global cocoa is produced, have led to reduced crop yields, tightening cocoa supply, and driving prices upward.
Cocoa futures have doubled in the past year and surged by 40% since January, while other factors such as sugar and labor costs have also increased. Consequently, consumers can expect higher prices for chocolate products in the near future.
Hershey’s CEO, Michele Buck, mentioned during an analyst call that cocoa is anticipated to limit earnings growth this year. The company raised its product prices by 6.5% in the fourth quarter, and prices for confectionery chocolate and other candy products in North America rose by 9% in 2023.
Other chocolate companies are also feeling the impact. Li-Lac Chocolates, recognized as the oldest chocolate shop in Manhattan, reported a 13% increase in raw chocolate prices this February compared to the previous year.
