Latest / Markets with Megan: A Quick Financial Markets Update / Good Data, Bad News for Stocks? | S3 E122 | 02-18-26

Transcript

Good Data, Bad News for Stocks? | S3 E122 | 02-18-26 · Markets with Megan: A Quick Financial Markets Update

• 0:01
  Megan Horneman: We got a slew of economic data today.
• 0:03
  Megan Horneman: It is Wednesday, February the 18th, and this is Markets with Megan.
• 0:07
  Megan Horneman: If you like this podcast, subscribe, hit the alarm button, share it with your friends, family, or colleagues.
• 0:13
  Megan Horneman: But we're here today to break down several different pieces of economic data that we got and then round it off with the minutes from the Federal Reserve's January meeting.
• 0:21
  Megan Horneman: Let's start first of all with some of the economic data that we received.
• 0:25
  Megan Horneman: We got the December durable goods orders.
• 0:28
  Megan Horneman: This is the preliminary reading on the December durable goods.
• 0:31
  Megan Horneman: So this has a lot to do with what may we may see with the estimates for four-quarter, fourth quarter GDP.
• 0:37
  Megan Horneman: And these were pretty good numbers when you take out the very volatile items like defense and aircraft.
• 0:44
  Megan Horneman: If you look at durable goods orders, excluding defense and aircraft, they rose for the sixth consecutive month.
• 0:50
  Megan Horneman: The headline, though, this includes those aircraft and bottle items, that did decline for the second time in the past three months.
• 0:57
  Megan Horneman: But that component that goes directly into GDP rose for the sixth month.
• 1:01
  Megan Horneman: And we saw orders on a lot of things AI related.
• 1:05
  Megan Horneman: So looking at computers, electronics, electrical equipment, these things are running between 7 and 8% on a year-over-year basis.
• 1:13
  Megan Horneman: Looking at machinery running 12% on a year-over-year basis.
• 1:17
  Megan Horneman: And then metals running about 10% on a year-over-year basis.
• 1:20
  Megan Horneman: So these are solid numbers that'll go into that input for fourth quarter GDP.
• 1:25
  Megan Horneman: We also got housing data, and we have been looking for some thawing in the housing data.
• 1:30
  Megan Horneman: And we saw this from the housing starts.
• 1:32
  Megan Horneman: And remember, we have an inventory problem in the US.
• 1:35
  Megan Horneman: Right now we are seeing that these housing starts rose to a five-month high.
• 1:40
  Megan Horneman: When you look at building permits, so this is the permits to eventually make break ground on construction, they also rose to a nine-month high.
• 1:49
  Megan Horneman: So good data ending the year from a housing perspective.
• 1:53
  Megan Horneman: It was primarily led by the multifamily housing units, so apartment buildings, and they did rise much more than the single-family homes.
• 2:01
  Megan Horneman: And then when you look from a regional perspective, it was the uh from the building permits, it was the Northeast, which saw a pretty big jump here in December.
• 2:10
  Megan Horneman: It's up 44%.
• 2:13
  Megan Horneman: When you look at the Midwest and West, also were strong.
• 2:16
  Megan Horneman: The South did see a decline in building permits, and then starts were concentrated though in that West and the Northeast.
• 2:24
  Megan Horneman: Now, the Fed came out at the end of the day.
• 2:27
  Megan Horneman: They released their meeting, their minutes from the January meeting.
• 2:31
  Megan Horneman: And remember, the January meeting, they remained on hold.
• 2:34
  Megan Horneman: And there was some uh the hawkish statement that was delivered by the Federal Reserve chairman, and we did see that carry over into the actual minutes.
• 2:42
  Megan Horneman: These do tend to be market moving because it gives us more indications of what the Fed was truly, how divisive the committee was, and what their true thoughts were there on the labor market and the inflation picture.
• 2:54
  Megan Horneman: What we saw was some of the comments from the this from the minutes were that several participated participants indicated they would have supported a two-sided description of the future interest rate decisions, reflecting that there could be an upward adjustment to the target range.
• 3:11
  Megan Horneman: So this is really the first time they've been very clear that interest rate hikes may actually be on the table.
• 3:16
  Megan Horneman: And that is if inflation remains at above target levels.
• 3:20
  Megan Horneman: The vast majority of the participants also judged that the downside risk to employment had moderated in recent months, while the risk of more persistent inflation remained.
• 3:31
  Megan Horneman: So this was a hawkish comment coming out of those meeting minutes.
• 3:35
  Megan Horneman: The market did have a really nice rally for most of the day with the decent data that we got in the beginning of the day, with really strong gains across the board.
• 3:45
  Megan Horneman: The markets did give the equity markets, did give some of that back with these hawkish meeting minutes.
• 3:50
  Megan Horneman: Um, and as we've said, that the we thought the markets this year have just been way too optimistic on what the Fed can do.
• 3:56
  Megan Horneman: Now, we're not in the camp to say that they're gonna have to raise rates yet.
• 4:00
  Megan Horneman: That's gonna be clearly dependent on the inflation um situation.
• 4:04
  Megan Horneman: But worth noting that the equities are still pricing in a very optimistic view on lower interest rates.
• 4:11
  Megan Horneman: That's all we have today.
• 4:12
  Megan Horneman: If you want a history of our podcast, you go to marketswithmegan.fm.
• 4:15
  Megan Horneman: Thank you.