The Federal Reserve lowered interest rates by a quarter point in what is being called a mid-cycle policy adjustment designed to address low inflation rates. While you can make some of the people happy some of the time, Mister Market bemoaned that the cut was “not enough” and responded with a selloff. The Dow fell 333 to 26,864 on heavy trading volume. Within the Fed comments it was noted that consumers continue to show strength but manufacturing has slowed down.
GE reported better than expected earnings. The company posted a 1% revenue decline and a 6% drop in profits. Going forward however CEO Larry Culp said the company had better visibility and was raising guidance for both cash flow and earnings. The gurus were mixed on the results. The guy at JP Morgan called the results “ugly” while over at RBC, analyst Deane Dray saw many beautiful positives and said the stock was a buy.
Apple reported good earnings sending shares higher. While sales and profits were down 1% and 6% respectively CEO Tim Cook said the month of June saw a return to growth in all product lines including iPhone, Mac, iPad and wearables. Tim noted however the growth rate in services was well over 50% and hit record levels. Overall company revenue, excluding iPhone sales was up 17% from last year. The street liked the news and sent share prices higher.
CPA.org economist Jeff Ferry wrote an article about how the trickle of manufactures leaving China is tuning into a flood. Here is a quote from the article: “The new normal is short supply chains, diversified manufacturing locations……..and avoid China.” It will be interesting to see how this trend plays out, but I suspect this is not music to the ears of President Xi. You can read the article which has been posted to our Faceplant page.