This will be a huge week for the markets.
On Wednesday, the Federal Reserve will announce its decision on interest rates on the heels of bank failures and bailouts.
Tough spot – if they don’t raise rates, inflation could get worse… and that’s bad.
If they do raise rates, more banks could find themselves holding underwater treasury notes, putting further strain on a very fragile banking system.
Ultimately, we think the Fed will raise rates by a token 25 basis points (just to show that they aren’t pushed around by markets --- ha!) and signal that they’re probably done unless inflation starts to show signs of an uptrend.
Earnings are fairly light this week:
ON Running (ONON) reports Tuesday prior to the market open and looks to put up its first positive earnings week since it surged nearly 40% during this same period last year.
GameStop (GME) will report Tuesday after the market and is looking at a +/- 12.8% move on the report.
Nike (NKE) will also report Tuesday after the market closes – LikeFolio is showing some signs of deteriorating consumer demand as wallets get thin.
Chewy (CHWY) reports after the market on Wednesday. Three of its last four earnings moves have been larger than 10% and short sellers have piled into bearish bets against this company. Any surprise to the upside could get explosive.
Bottom line – it could be a crazy week, with Wednesday afternoon essentially breaking things into two sections of the week.
We’d be cautious with any positions going into the Fed data… there’s always another trading day to establish positions with more information.