--- title: "Market Update: Feb. 1 Statement Shares Fed's Next Move" description: Check out this article from First Trust Portfolios L.P. It's an easy read and does an excellent job of breaking down what the Fed is trying to do. image: https://blog.emvisioncapital.com/hubfs/EmVision%20Blog%20Image--Feb.%201%20Market%20Update_Blog%20Image.png --- Menu [Investor 360 Client Portal](https://signon.advisor360.com/as/authorization.oauth2?response_type=code&access_token_manager_id=jwt&AuthParam=SQL&client_id=Investor360&pfidpadapterid=i360Idpadapterid&isI360=true&redirect_uri=https://www.investor360.com/Login/login&state=null) [** ](https://www.facebook.com/EmVisionCapitalAdvisors/) [** ](https://www.linkedin.com/company/emvision-capital-advisors/) [** ](mailto:info@emvisioncapital.com) [ (330) 954-3770 ](tel:3309543770) # [![EmVision Capital Advisors](https://blog.emvisioncapital.com/hubfs/raw_assets/public/EmVisionCapitalAdvisors_August2022/images/36-layers.svg "EmVision Capital Advisors")](https://emvisioncapital.com/) # Market Update: Feb. 1 Statement Shares Fed's Next Move * Published by Michael Embrescia * We recently came across this article written by Brian Wesbury, Chief Economist, and Robert Stein, CFA, Deputy Chief Economist, both from [First Trust Portfolios L.P.](https://www.ftportfolios.com/) This article is an easy read and does an excellent job of breaking down what the Fed is trying to do, so we wanted to share it. Take a look!  ## Slowing, Not Stoping *By: Brian Wesbury, Chief Economist, and Robert Stein, CFA, Deputy Chief Economist, First Trust Portfolios LP* The Fed downshifted to a smaller rate hike to start 2023, but the job is far from done. As expected, the Fed raised rates by 25 basis points (bp) Wednesday, Feb. 1, slowing from the 50bp hike in December, and the 75bp hikes at the four meetings before that. However, the Fed continued to reiterate that ongoing tightening is warranted and repeated the view that the risk to doing too little is greater than the risk of doing too much. While we have to wait for March to get updated forecasts from the Fed (the dot plots), there were a number of changes to the Fed statement and Powell had plenty to talk about during his press conference.  If you only saw the [Feb. 1 statement](https://www.federalreserve.gov/newsevents/pressreleases/monetary20230201a.htm) announcing the Fed’s move, the primary takeaway would be a shift toward a more dovish tone. Instead of focusing on the factors causing inflation to stay elevated, the Fed introduced new text that inflation pressures have started to ease. And gone is commentary about the ongoing Russian/Ukraine conflict contributing to inflationary pressures, which is now replaced with a note that the conflict is keeping global uncertainty elevated.  Finally, with the size of today’s rate hike down to 25bp, text was changed to shift the attention from the pace of hikes to the extent of future hikes. In other words, the Fed’s focus is now on finding the finish line. Then the press conference started. [Chair Powell](https://www.federalreserve.gov/aboutthefed/bios/board/powell.htm) started dovish stating that it is “gratifying” to see disinflation starting to show in the data, and acknowledging that softening in wage pressures is a positive sign for future inflation, but he then tempered those remarks by reinforcing his belief that there is more work to be done. What has the Fed concerned is that non-housing service inflation remains unusually high. Until this metric turns, the Fed will not feel comfortable claiming victory and backing off. [Nick Timiraos](https://www.wsj.com/news/author/nick-timiraos), the Wall Street Journal’s Fed reporter who many watch as an unofficial mouthpiece for Powell and Co., asked the question that many have been thinking: Can the Fed simply pause at the current level of rates and watch to see how that flows through to inflation prints in the months ahead? Powell responded by saying the Fed thinks the greatest risk, and the most difficult situation for the Fed to manage, is in not doing enough and seeing inflation reaccelerate. If the Fed overshoots on tightening and inflation comes down faster and further than anticipated, the Fed has far more tools available to ease policy.  Victory over inflation is priority number 1. It’s good the Fed has prioritized the fight against inflation, but the necessary path to get there will likely bring volatility to the financial markets.  While markets have rallied to start the year, we expect the party to end once they realize how much the economy will slow due to the decline in the M2 measure of the money supply since early last year. That economic medicine, while bitter, is part of the price we pay for the policy mistakes in 2020-2021. And we are still amazed at how little attention the Fed and journalists give the money supply. ## Questions? If you have questions about this article, we're happy to chat. [Contact us](https://emvisioncapital.com/contact-us/) today.    Michael Embrescia is a financial advisor located at **EmVision Capital Advisors, 251 W. Garfield Rd. ​Suite 155 Aurora, OH 44202**. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at [(330) 954-3770](tel:3309543770) or at [info@emvisioncapital.com](mailto:info@emvisioncapital.com). *This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.* #### SHARE [**](https://www.facebook.com/sharer/sharer.php?u=https://blog.emvisioncapital.com/market-update-feb.-1-statement-shares-feds-next-move&src=sdkpreparse) #### EmVisionblog ## welcome [![Q1 2023 Market Highlights](https://blog.emvisioncapital.com/hubfs/Q1%202023%20Market%20Updates.png) ###### Q1 2023 Market Highlights Some market highlights from the first quarter of 2023 include: March results helped all three major U.S. indices end the first quarter of 2023 in the green. Despite mid-March market turbulence caused by strain on the banking industry, economic... ![EmvisionCapital](https://blog.emvisioncapital.com/hubfs/raw_assets/public/EmVisionCapitalAdvisors_August2022/images/36-layers-1.svg) ](https://blog.emvisioncapital.com/q1-2023-market-highlights) [![What Happens to Stocks After The First Rate Cut?](https://blog.emvisioncapital.com/hubfs/What%20Happens%20to%20Stocks%20After%20the%20First%20Rate%20Cut.jpg) ###### What Happens to Stocks After The First Rate Cut? The Federal Reserve (Fed) last raised interest rates between 5.25% and 5.5% in July 2023 and has since been on hold. Keeping our economy healthy is at the core of the Fed’s responsibilities. The Fed does this through its dual mandate of price... ![EmvisionCapital](https://blog.emvisioncapital.com/hubfs/raw_assets/public/EmVisionCapitalAdvisors_August2022/images/36-layers-1.svg) ](https://blog.emvisioncapital.com/what-happens-to-stocks-after-the-first-rate-cut) [![Your 2025 Financial Outlook](https://blog.emvisioncapital.com/hubfs/Your%202025%20Financial%20Outlook_Blog%20Image.png) ###### Your 2025 Financial Outlook As we enter 2025 with a fresh start, it's an opportune time to reassess and fine-tune our financial portfolios. While there are factors we can control, there are also broader economic forces at play that we must monitor carefully. ![EmvisionCapital](https://blog.emvisioncapital.com/hubfs/raw_assets/public/EmVisionCapitalAdvisors_August2022/images/36-layers-1.svg) ](https://blog.emvisioncapital.com/your-2025-financial-outlook) [![Icon_feather-phone](https://blog.emvisioncapital.com/hubfs/Icon_feather-phone.svg) (330) 954-3770 ](tel:3309543770) [![Mail](https://blog.emvisioncapital.com/hubfs/Icon_material-mail-outline.svg) info@emvisioncapital.com ](mailto:info@emvisioncapital.com) ![Location](https://blog.emvisioncapital.com/hubfs/Icon_material-place.svg) 251 W. Garfield Rd. ​Suite 155 Aurora · OH · 44202 ![Location](https://blog.emvisioncapital.com/hubfs/Icon_material-place.svg) 1954 Hubbard Rd. Madison · OH · 44057 ## Contact us [![Brokercheck_Logo](https://blog.emvisioncapital.com/hs-fs/hubfs/Imported%20sitepage%20images/Brokercheck_Logo.png?width=119&name=Brokercheck_Logo.png "Brokercheck_Logo")](https://content.commonwealth.com/repsitecontent/Form-CRS-Online.pdf) [![riskalyze_0](https://blog.emvisioncapital.com/hs-fs/hubfs/Imported%20sitepage%20images/riskalyze_0.png?width=86&name=riskalyze_0.png "riskalyze_0")](https://brokercheck.finra.org/?ref=forexcuratorcom%20%20) [![investor360-logo](https://blog.emvisioncapital.com/hs-fs/hubfs/Imported%20sitepage%20images/investor360-logo.png?width=119&name=investor360-logo.png "investor360-logo")](https://emvisioncapital.com/riskalyze-web/) ###### [Form CRS: Client Relationship Summary](https://content.commonwealth.com/repsitecontent/Form-CRS-Online.pdf) Securities and advisory services offered through Commonwealth Financial Network®, member [FINRA](http://www.finra.org/)/[SIPC](http://www.sipc.org/), a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network®. This communication is strictly intended for individuals residing in the states of OH, AZ, CA, CO, DC, FL, LA, MD, MI, MS, NM, OR, PA, SC, SD, TX, VA, AL, HI. No offers may be made or accepted from any resident outside these states due to various state requirements and registration requirements regarding investment products and services. Review our Terms of Use: www.commonwealth.com/termsofuse.html. Copyright © 2022 EmVision Capital Advisors. All rights reserved. ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Michael Embrescia", "url" : "https://blog.emvisioncapital.com/author/michael-embrescia" }, "dateModified" : "2023-02-07T19:31:05.927Z", "datePublished" : "2023-02-07T19:31:05.000Z", "headline" : "Market Update: Feb. 1 Statement Shares Fed's Next Move", "image" : [ "https://blog.emvisioncapital.com/hubfs/EmVision%20Blog%20Image--Feb.%201%20Market%20Update_Blog%20Image.png" ], "mainEntityOfPage" : { "@id" : "https://blog.emvisioncapital.com/market-update-feb.-1-statement-shares-feds-next-move", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject" }, "name" : "EmVision Capital Advisors" } } ```