What are the odds of a December rate hike? Could your gym be going virtual? And what can big box stores teach you about investing? Get all the details in this edition of Steady Investor’s Week…
Will the Fed’s “Unwinding” Impact the Markets? – The Federal Reserve met this week and decided on Wednesday to leave interest rates unchanged, a move largely expected by market watchers and by analysts here at Zacks Investment Management. The tone struck by the Fed was what we might refer to as “reluctantly hawkish.” The central bank announced plans to begin passively shrinking its $4.2 trillion portfolio of mortgage and Treasury bonds next month, by allowing some bonds to mature without being replaced. Shaving $10 billion off the balance sheet next month is a start, but it points to just how gradual the Fed intends to take these tightening measures. In our view, the odds of a December rate hike remain high, which would on the whole categorize 2017 as a tightening year, but not in the traditional sense. It should be noted that a rate hike later this year is not a certainty – on the other side of the pendulum the Fed is notably concerned over stubbornly low inflation, which many governors attribute to the “technology disruption” on prices of goods and services. Inflation readings over the next two months are almost certain to sway the Fed one way or the other, and will be watched closely. If the Fed succeeds in slowly and gradually unwinding its extraordinary monetary policy measures over the next couple of years, it could arguably offer a model to other central banks on how to address a financial crisis, return an economy to growth, and to slowly normalize policy over time.
Virtual Reality Coming Soon…to Your Gym? Virtual reality (VR) and artificial intelligence are two of the biggest buzzwords in tech these days, and it’s likely to remain that way for years to come. What investors may not fully comprehend yet is just how many industries these new technologies can enter, and how much of a monetary impact they can have. VR, for example, is starting to make moves into the $27.6 billion health-club industry, with a new generation of VR games simulating boxing, fencing, tennis, and other cardiovascular intense sports. A large swath of the health nut population would arguably prefer sports over the mundane tasks of lifting weights and running on treadmills, and VR could be instrumental in driving that shift. Watch as the biggest fitness clubs race to carve out space for VR and actively promote it as part of a menu of exercise options.
The End of an Era? Once the nation’s most iconic and beloved toy store, Toys ‘R Us, is officially bankrupt. Its decline is just the latest in a growing trend of big box stores closing doors as eCommerce platforms gain traction and as consumer behavior shifts away from in-store visits. Toys ‘R Us faced imminent deadlines to pay off hundreds of millions in debt, and with no way out was forced to file Chapter 11. For investors, this and other big box lessons underscore the importance of investing in companies that are pouring resources into adapting their business models with the times. Companies like Walmart and Target, even with their big box approach, have managed to grow over the last few years as other retailers like Toys ‘R Us and JC Penney have failed to evolve quickly enough.
As this week comes to a close, news stories leave us with more unanswered questions. With that, it can be very time-consuming for investors to keep up with shorter-term trends, news and events that could impact their investments. To help give you a leg up, we’ve laid them out for you in our newly released Zacks’ Stock Market Outlook report. This exclusive Report is a quick read but contains predictions that can help you assess your portfolio. Learn more by clicking on the link below: