New All-Time Highs

Earnings season is ramping up and so far we have disappointing bank earnings and evidence that artificial intelligence users are driving demand for computing power. Taiwan Semiconductor earnings released this week projected a 20% rise in revenues as orders flow in to keep up with the needs of artificial intelligence users.

The S&P 500

This is good news and gives the markets a positive catalyst and this drove stock prices as the S&P 500 made a new all-time high for the first time in two years. I would also add that the rise this week was not based on Fed policy, interest rates or inflation but on the potential for greater profitability (which is nice). The artificial intelligence software will likely create a great deal of efficiency for many industries and we should begin to get a report card on this activity in the coming weeks.

Interest Rates

We do have another inflation reading next week with the Personal Consumption Expenditures (PCE) which is the barometer used by the Fed to gauge inflation. The number of rate cuts remains up for debate as does the prospect for growth and the lagged effects of the rate hikes from last year.

We can see above that rates have been rising over the last month as we await the PCE and the next policy decision on January 31st. Some economists are predicting the first rate cut will be in March so I would suspect that the Fed would hint at that this month as there is no February meeting.

Overall, the markets have a positive tone with a strong labor market and the prospect for new avenues of profitability.

Paul McCarthy, President of Kisco Capital, LLC

Thank you for being a subscriber!

Paul J McCarthy III

President, Kisco Capital

Paul McCarthy

Mr. McCarthy is the President and founder of Kisco Capital.