President Trump announced on Thursday his nomination of Federal Reserve Governor Jerome Powell as the next Fed Chair. Powell’s policies are seemingly in line with the opinions of the current Fed Chair Janet Yellen allowing the market to respond with minimal change. He was seen as the continuity candidate as many believe he will stay on the current monetary policy course as long as the economy continues its steady growth. Powell’s nomination was the first time in 40 years that an incumbent was not asked to stay on for another term.
Markets were mixed this week as investors wait for more information regarding the GOP tax plan and Mueller’s next round of charges. The long-awaited tax reform plan was revealed Thursday as a key corporate tax cut will slash rates from 35 to 20 percent and will be implemented over the course of the next decade. The new corporate tax rate will have the greatest effect on the market and large-scale companies, however, individual tax cuts will greatly help certain individuals in the long-run. Mueller filed his first charges in the Russian-hacking election investigation on Monday. While these charges left investors cautious, we will only see the true impact of the investigation if the subpoenas get closer to President Trump himself.
Several of the biggest companies reported their third-quarter earnings this week. Tesla’s (TSLA) shares plunged following their report on Wednesday as they reported lower-than-expected EPS and pushed back their expected launch of the Model 3. Facebook (FB) dropped slightly after their earnings report due to an increased investment in security, however, investors are excited about its unprecedented user growth as almost every analyst increased their price target for the stock. Apple (AAPL) reported earnings after-hours on Thursday as they beat expectations on both EPS and revenue. Shares soared following the announcement.
The Fed announced it was keeping rates unchanged on Wednesday as it continues to look forward to an imminent hike in December. The Federal Reserve pointed to solid US economic growth and a strengthening labor market as it left rates unchanged once again this year. As expected, the announcement came with an implication that rates will most likely be raised in December. This will be an interesting development to watch as the newly-nominated Fed chair Jerome Powell will have a large say in this decision.
The Bank of England announced it was raising interest rates for the first time in a decade on Thursday. The governing financial body of England raised rates from 0.25% to 0.5% as the UK continues to prepare itself for the long-term inflation effects of Brexit. The pound dropped heavily in foreign markets following the news.
Catalonia President Carles Puigdemont fled to Belgium on Tuesday as the Spanish government threatens jail time for former members of the deposed Catalan government. On Thursday, seven arrests were made including the former Catalan vice president on charges of “sedition” and “rebellion”. Markets increased following the news as Catalonia’s push for independence seems to have hit a massive wall.