Daily Brief - Fed's Future Focus

TLDR: As the Federal Reserve prepares for its upcoming meeting on March 20, investors should pay close attention to the "dot plot" and any hints regarding the pace of the balance sheet runoff.

Despite expectations being tempered for an immediate rate cut, the updated "dot plot" could reveal shifts in the Federal Reserve's views on the long-term trajectory of the U.S. economy.

The Fed's long-run policy rate assumption, traditionally stable at around 2.5%, and its strategy for returning inflation to the 2% target, suggest a "real" neutral rate of just 0.5%, contrasting sharply with the current real policy rate of approximately 2.5%.

This backdrop, combined with the ongoing discussions among Fed officials about the elusive nature of the neutral rate, indicates that any adjustment in the Fed's rate projections could have significant implications for the markets.

Investors should particularly note that the market's current anticipation of the Fed's policy rates settling in the 3.0-3.5% range over the next two years marks a significant departure from the Fed's previous assumptions.

Market Movers: When Fed policy rate is between 3-3.5%

Here are the top 3 and bottom 3 performing sectors on a 6-month horizon when the Fed's policy rate has historically been between 3-3.5%%:

Top 3 Performing Assets:

1. S&P Oil Equip - 26.96% return
2. S&P Transportation - 19.93% return
3. S&P OIL GAS EXPLOR PROD - 14.41% return

Bottom 3 Performing Assets:

1. S&P Media - -2.43% return
2. S&P Homebuilders Select Industry Index - -5.70% return
3. S&P Autos & Components - -13.27% return

Asset Spotlight: Boeing 12D,26D MACD drops

In the last 11 occasions where Boeing's MACD fell, Toggle's analysis showed a median upward movement in the stock's price over the subsequent 6 months.

In an effort to regain trust and demonstrate its commitment to safety and quality, Boeing is implementing measures such as additional inspections in the supply chain, collaboration with suppliers on production enhancements, and opening its factory to 737 customers for their own reviews.

Earnings Update: XPeng reports tomorrow

The company delivered a record 60,158 vehicles in the fourth quarter, marking its first time exceeding 60,000 units, which aligns with its previously guided range of 59,500 to 63,500 units.This represents a significant year-on-year increase of 170.93% and a 50.36% rise from the third quarter.

The fourth-quarter revenue is expected to be in the range of RMB 12.7 billion ($1.79 billion) to RMB 13.6 billion, indicating an increase of about 86.1% to 99.3% year-on-year. The company's gross margin in the third quarter was -2.7 percent, showing an improvement from -3.9 percent in the second quarter.

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.