Financial and Economic Brief - May 9, 2017by © Liberty Publishing, Inc.
Interest Rate Hikes “On Track”
In a recent speech, Cleveland Federal Reserve President Loretta Mester said that the U.S. Federal Reserve has met its employment goal (unemployment was 4.4% in April) and has almost reached its inflation goal (2%), despite some recent “weak” economic data, so it should continue raising interest rates. She noted, “Although we live in a high-frequency world, we cannot overreact to transitory movements in incoming data.” Mester believes the Fed “should not delay” further policy tightening until its two key mandates are fully met and discussed “shedding” some of the $4.5 trillion bonds in the Fed’s portfolio.
Sinclair Acquires Tribune Media Co.
The largest U.S. broadcaster, Sinclair Broadcast Group, is set to acquire Tribune Media Co., in an almost $4 billion deal. The deal will grow Sinclair's reach. Tribune Media has 42 stations and reaches more than 43% of the nation. The deal wouldn't have been possible until last month's decision by the Federal Communications Commission (FCC) to ease limits on TV-station ownership. Currently, a media company cannot exceed 39% nationwide market share. “The Tribune stations are highly complementary to Sinclair's existing footprint and will create a leading nationwide media platform that includes our country's largest markets,” Sinclair CEO Chris Ripley said in a statement.
S&P 500 and Nasdaq Down
Monday the S&P 500 and the Nasdaq Composite fell after reaching record highs. The euro hit a six-month high against the U.S. dollar after Macron defeated Marine Le Pen in the French election. “We're sitting here waiting for additional information to digest for the balance of this week. But we remain largely constructive of the equity market and view that the path of least resistance is higher,” said Bill Northey, chief investment officer at U.S. Bank.