Daily Agenda: FOMC Meeting Puts U.S. Markets in Macro View

Apple announces $200 billion dividend and buyback program; U.K. GDP slows; Japanese shoppers hesitant.


Andrew Harrer

The latest Federal Open Market Committee gets underway today, bringing back into light the relationship between U.S. market sentiment and expectations of when the Federal Reserve will begin lifting rates. After coming into the year with near-consensus expectations for a hike over the summer, a new set of sluggish economic data points and a strong U.S. dollar are leading many to conclude an autumn announcement is looking more likely. A critical point in the decision process for Fed Chair Janet Yellen and her colleagues will be the pace of wage acceleration. Despite gains in employment there has not yet been a clear signal that labor costs are rising sufficiently to nudge inflation higher. As per usual, investors will focus on any minute change in language in the announcement tomorrow for clues.

Apple announces dividend. Apple announced first quarter earnings that exceeded analysts’ estimates, driven in part by iPhone sales that were 40 percent higher year-over-year. The company also announced a $200 billion program of dividends and buybacks, scheduled within the next two years.

U.K. GDP disappoints. Growth data for the U.K. for the first three months of the year came in significantly lower than consensus estimates, with headline GDP registering at 0.3 percent, the slowest pace since the same period in 2013. Separately, new poll data suggests that Prime Minister David Cameron’s Conservative Party may have regained a slight lead in the run-up to parliamentary elections May 7.

Japanese retail sales slump. One year after a hike to the national sales tax, shoppers in Japan are still reluctant to spend, according to data released today by the country’s Ministry of the Economy, Trade and Industry. Retail trade fell by nearly 10 percent in March versus the same month last year and marks the third consecutive year-over-year decline for the index. To date, the massive easing program underway at the Bank of Japan has appeared to have little impact on household consumption.

BP earnings beat estimates. London–based energy giant BP announced earnings today that, although 20 percent lower than the first quarter of 2014, handily beat expectations in light of the recent oil price swoon. Total adjusted earnings registered at $2.6 billion while the company also announced a one-time charge of $332 million relating to claims over the 2010 Deepwater Horizon spill in the Gulf of Mexico.

U.S. housing data on deck. U.S. real estate markets will be in the spotlight with the release of February Case-Shiller home price index levels. The benchmark 20-city index rose by 0.9 percent in January after a 0.9 percent gain in December.

Athens mentions possible referendum. In an interview on Greek television channel Star TV, Prime Minister Alexis Tsipras mentioned the possibility of a referendum if his government is unable to reach a deal with creditors before the May 12 due date for a payment to the International Monetary Fund. Tsipras claimed confidence that a successful conclusion will be reached in the meantime.