Raphael Stevens

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    in Business

    Fall Covid shot rollout gets off to a bumpy start as some patients see insurance delays

    The rollout of a new round of Covid vaccines in the U.S. is off to a bumpy start as some patients report delays in health insurance coverage for the shots. 
    Private insurance plans and government payers such as Medicare are required to cover the new jabs from Pfizer and Moderna, which became available late last week.
    Dozens of posts on social media in recent days show some patients were charged anywhere between $125 and $190 for a shot at pharmacies. Others were told their insurance plans aren’t covering the new vaccines yet. 

    Pharmacist Ani Martirosyan administers an immunization to a patient at a CVS on Tuesday, Sept. 12, 2023 in Glendale, CA.
    Brian Van Der Brug | Los Angeles Times | Getty Images

    The rollout of a new round of Covid vaccines in the U.S. is off to a bumpy start as some patients report delays in health insurance coverage for the shots. 
    Private insurance plans and government payers such as Medicare are required to cover the new jabs from Pfizer and Moderna, which became available late last week. U.S. regulators have recommended all Americans ages 6 months and up get the new round of vaccines. 

    The Centers for Medicare & Medicaid Services, some private health-care providers and CVS confirmed the temporary delays in coverage and emphasized that Americans can access Covid vaccines at no cost through insurance plans. They said the reason for the delays is that some insurers are still working to update their plans to include the new vaccines.
    Dozens of posts on social media in recent days show some patients were charged anywhere between $125 and $190 for a shot at pharmacies. Others were told their insurance plans aren’t covering the new vaccines yet. 
    The reports are fueling confusion among insured patients about whether they can still access Covid shots for free – even after public health officials have reassured them that they can — just as cases tick up across the country.
    It also comes after a huge shift in how Covid vaccines are covered in the U.S.
    The government is moving shots to the commercial market, which means manufacturers will sell their new jabs directly to health-care providers at more than $120 per dose. Previously, the federal government purchased Covid vaccines directly from manufacturers at a discount to distribute to all Americans for free.

    A CMS spokesperson said the agency is “aware that some consumers have had difficulty accessing COVID-19 vaccines, including experiencing unexpected insurance coverage denials at the point of service.”
    CMS has been in “close contact with the plans about these transitions for months,” and is reaching out again to ensure that their systems are “up-to-date and prepared to meet their obligations to provide coverage of Covid-19 vaccines for participants, beneficiaries, and enrollees,” according to the spokesperson. 
    A spokesperson for CVS told CNBC that some payers “are still updating their systems and may not yet be set up to cover the updated COVID-19 vaccines.” They added that the company’s pharmacy teams can help patients schedule a vaccine appointment for a later date if their coverage is denied. 
    Sarah Lindsey, an owner of a Florida-based jewelry store, called on her own insurer to add the new Covid shots to its formulary. 
    “Any insured member trying to get it at a pharmacy is being told it’s not approved and will cost $155. There’s no excuse for this,” she wrote Monday in a post on X, formerly Twitter, tagging Florida Blue, a local Blue Cross Blue Shield insurer. 

    CNBC Health & Science

    Read CNBC’s latest health coverage:

    A spokesperson for Florida Blue said a “small percentage” of patients experienced issues with coverage, but the insurer does cover the shots for most beneficiaries at no cost. Any insured patients who were charged for a Covid shot should contact their pharmacy for reimbursement or file a claim with Florida Blue.
    Meanwhile, a spokesperson for health-care provider Elevance Health urged pharmacies to resubmit Covid vaccine claims “so they can be processed at a $0 copay.” They added that they expect the delays in coverage to be resolved quickly.
    The coverage missteps come amid concerns that a mix of pandemic fatigue, the belief that Covid is “over” and confusion over personal risk levels will hinder the uptake of the new vaccines, which are designed to target the omicron subvariant XBB.1.5. 
    Only 17% of the U.S. population — around 56 million people — have received Pfizer’s and Moderna’s bivalent Covid boosters since they were approved last September, according to the Centers for Disease Control and Prevention.  More

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    in Finance

    Take the Fed forecast with a grain of salt. It has a terrible track record

    The U.S. Federal Reserve Building in Washington, D.C.
    Win Mcnamee | Reuters

    On Wednesday, the Federal Reserve will publish its latest economic forecasts. There will be an intense focus on the Summary of Economic Projections, which is the Fed’s own estimates for GDP growth, the unemployment rate, inflation and the appropriate policy interest rate. 
    The summary will be released as an addendum to the statement following Wednesday’s Federal Open Market Committee meeting.

    Investors will carefully study these projections, and they will likely move the market. 
    But should you change your investment portfolio based on the Fed’s projections? You probably should not.
    The Fed’s poor forecasting record: One example
    Larry Swedroe, head of financial and economic research at Buckingham Strategic Wealth, for decades has studied economic forecasts of everyone from stock-picking gurus to the Federal Reserve. 
    He has this piece of advice: Don’t base your investment decisions on what the Fed says. Or anyone else, for that matter. 
    Swedroe recently wrote an article where he looked at one simple metric: the Fed’s effort to project its interest rate increases for 2022. 

    Swedroe noted that at the end of 2021, the Federal Reserve forecast that it would need to raise rates three times and that its policy target rate would end 2022 below 1%. 
    What actually happened?  The Federal Reserve raised the Fed funds rate seven times in 2022, ending the year with the target rate at 4.25%-4.50%. 
    Federal Reserve: 2022 meetings
    (rate hike each meeting, in basis points)

    Dec. 14 — 50 bp
    Nov. 2 — 75 bp
    Sept. 21 — 75 bp
    July 27 — 75 bp
    June 16 — 75 bp
    May 5 — 50 bp      
    March 17 — 25 bp 

    What happened? How could the Fed have been so wrong? It simply mis-forecast the rate of inflation. 
    “One of the surprises, at least to the Fed, was that inflation turned out to be much higher than its forecast,” Swedroe wrote. “Its December 2021 forecast for 2022 inflation was for the core CPI to be between 2.5% and 3.0%. Inflation turned out to be more than double that.” 
    If the Fed can’t get it right, what hope do we have? 
    This has implications for forecasting in general. Swedroe, along with many others, has long noted the poor track record of stock market forecasters. But the Federal Reserve is a special case:  “One would assume that if anyone could accurately predict the path of short-term interest rates, it would be the Federal Reserve — not only are they professional economists with access to a tremendous amount of economic data, but they set the Fed funds rate.” 
    Yet the Fed has a poor track record predicting not just interest rates, but other issues such as GDP growth.  I discuss this in my book, “Shut Up and Keep Talking:  Lessons on Life and Investing from the Floor of the New York Stock Exchange.” The Fed’s own research staff studied the Fed’s economic forecasts from 1997 to 2008 and found that the Fed’s predictions for economic activity one year out were no better than average benchmark predictions. 
    How does this happen?  There are two problems: 
    1) Predictions from the Fed and everyone else are riddled with bias and noise that limit the quality of those predictions; and 
    2)   Lack of complete information, because events occur that are unpredictable and can affect outcomes. 
    All of this should make everyone very humble about forecasting, and less eager to make sudden changes in investments. The key to investing is to know your risk tolerance, have a long-term plan, stay invested and avoid market timing. 
    Swedroe’s conclusion: “If the Federal Reserve, which sets the Fed funds rate, can be so wrong in its forecast, it isn’t likely that professional forecasters will be accurate in theirs.” More

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    Walmart opens a pet center with veterinary care and grooming as it signals bigger ambitions

    Walmart is opening its first pet services center, outside Atlanta, with plans to open more locations.
    The pilot location will offer vet care and grooming services.
    The retailer has also rolled out a service that allows customers to automate orders of dog food, cat litter and other frequent purchases.

    Walmart is piloting a pet services center in a suburb of Atlanta, but plans to open more locations in other parts of the country.

    Walmart is opening a dedicated pet services center, signaling it wants to be a place that customers turn to for veterinarian visits and dog grooming appointments along with grocery runs.
    On Wednesday, the retailer is opening a first-of-its-kind center in Dallas, Georgia, a suburb about 30 miles northwest of Atlanta.

    With the move, the nation’s biggest grocer is building on its traditional pet business. It has sold pet items for decades, including Ol’ Roy, its private label dog food that’s named after Walmart founder Sam Walton’s English setter.
    Yet with the new facility, Walmart will dip its toe into a more lucrative part of the pet industry: health care and other services. The company already stocks top pet medications at its Walmart pharmacies.
    Walmart’s pet services center will have its own dedicated entrance next to a store. It will carry the Walmart name, but employees of vet care and pet product company PetIQ will staff it. PetIQ has rented space for vet clinics inside more than 65 Walmart stores, after opening its first one in 2016.
    The Georgia location will serve as a pilot, but Walmart plans to open more locations, said Kaitlyn Shadiow, vice president of merchandising for pets for Walmart U.S. She declined to say how many pet shops it may ultimately have but said Walmart plans to open more next year, if not sooner.
    “We know pet services is an important need for our customers and we want to be able to provide that all in one place,” she said. She cited a Morgan Stanley study that found that about 40% of total pet industry revenue is driven by services.

    As Americans treat their dogs, cats and other animals like family members, more retailers have chased the expanding pool of dollars consumers are spending on vet bills or fashion-forward leashes or other accessories.
    Those include Kohl’s, which has started to devote space to pet items in some stores, and Lowe’s, which announced it is expanding mini Petco Health and Wellness shops and mobile vet services to more stores after testing the concept.

    Walmart is starting to offer pet services as other retailers, including Chewy and Petco, also chase opportunities to offer veterinary care.

    Consumers in the U.S. spent $136.8 billion on pets last year, according to industry group American Pet Products Association. That huge market includes a long list of expenses, such as food and treats, boarding, dog walking and veterinary care. After pet food and treats, vet care and products are the second-biggest driver of the industry — tallying up to $35.9 billion last year, according to APPA.
    As the Covid-induced pet boom recedes and consumers buy fewer pet toys and supplies, Chewy and Petco have both looked to pet health care to drive their futures — especially as those pandemic pups and other pets grow up.
    Retailers consider the pet space, much like items for kids, an attractive area because consumers are usually still willing to spend when their budgets are tight or the economy hits a rough patch, said Anna Andreeva, an analyst for Needham & Company who covers consumer and e-commerce companies including pet specialty retailers.
    Yet in the past few months, she said, cracks have emerged in that theory. Petco, Chewy and General Mills, the maker of dog food Blue Buffalo, have warned that some pet owners are becoming more price-sensitive and even trading down to cheaper pet food as they deal with inflation.
    For Walmart, that cost-conscious mentality could bring a competitive advantage — much like the one its grocery business has enjoyed over the last year due to its low-price reputation.

    What Walmart’s pet center will provide

    At the pet services center, Walmart will offer a range of vet and grooming services, including wellness exams, nail trims, teeth cleaning, hair cuts and more. The services range in price, from $15 nail trims to $25 rabies shots to $97 for a vital package. That visit includes a physical exam, several vaccines and a parasite screening.
    The pet store will provide vet services for dogs and cats. Grooming is available for dogs. Walmart said it has no plans now to add other animals.
    Along with opening the center, Walmart started rolling out a new offering this week that can automate customers’ frequent orders, including pet food and supplies. The subscription-based approach, which requires no fee, rips a page from the playbook of direct-to-consumer pet specialty retailer, Chewy. The company has grown its business with the help of Autoship, which allows customers who set up repeat deliveries of items to get a discount.
    The company’s membership program, Walmart+, has also gotten some pet-related perks, including a free one-year membership to pet telehealth service Pawp.
    Yet as it moves further into the pet space, Walmart will have to prove it can gain traction in a new business. The company has made a similar push to offer lower-priced doctor, dentist and therapy appointments to people through Walmart Health. It opened its first health clinic in 2019 in the same store in Dallas, Georgia, where it will now test pet services.
    The clinics speak to the challenge of entering a new business. Walmart’s health clinics have opened slowly, and the expansion effort has been complicated by frequent turnover of top leadership.
    By the end of 2023, Walmart expects to have a total of 48 health centers in Georgia, Arkansas, Illinois, Texas and Florida — only about 1% of Walmart’s more than 4,500 U.S. locations.
    With the proximity of Walmart’s pet service center to its store, the retailer will try to nudge customers to other purchases, as well. The pet center will have a small amount of retail space, where Walmart initially plans to sell its own private label pet brands.
    And while only service pets are allowed inside Walmart stores, customers who drop off a pet for a vet visit or grooming service can leave their dog at the kennel overseen by PetIQ employees while they swing into the store for groceries and other items, Shadiow said. More

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    in Finance

    Stocks making the biggest moves premarket: Pinterest, Instacart, Bausch Health and more

    Pinterest app on a mobile phone.
    Andrew Harrer | Bloomberg | Getty Images

    Check out the companies making headlines before the bell.
    Dollar General — Dollar General shares fell 2% after JPMorgan downgraded the discounter to underweight from a neutral as the company’s core shopper grapples with persistent inflationary pressures and dwindling savings.

    Pinterest — Shares climbed more than 3% premarket after management said at the company’s first investor day that it expects year-over-year revenue growth to accelerate following a slowdown in 2022 and 2023. Both Citi and D.A. Davidson upgraded to buy and increased their price targets in reaction Wednesday.
    General Mills — The Cheerios and Yoplait maker rose 1% premarket after reporting fiscal first-quarter results slightly above Wall Street expectations, and reiterating its outlook for fiscal 2024.
    Instacart — Shares of the grocery delivery company were down nearly 4% one day after its stock market debut. The stock opened at $42 on its first day of trading, after pricing its IPO at $30 a share late Monday.
    Coty — The cosmetics maker gained nearly 6% premarket after raising its full year outlook for 2024, citing momentum in fragrances at its prestige brands, including Burberry, Calvin Klein and Gucci. It expects like-for-like sales to grow between 8% and 10% next year, compared to prior guidance of 6% to 8%.
    Bausch Health — The pharmaceutical stock gained more than 5% before the open after Jefferies upgraded to a buy and raised its price target to $16. The investment bank cited strong third-quarter earnings, increased clarity on the Bausch + Lomb spinoff and likely legal victories as catalysts.

    Goldman Sachs — Shares edged up fractionally premarket on reports the investment bank plans to sell lending platform Greensky as part of a broader pullback from consumer lending. The deal would be worth about $500 million, according to Bloomberg.
    — CNBC’s Yun Li, Tanaya Macheel, Pia Singh and Samantha Subin contributed reporting More

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    Ark CEO Cathie Wood says she avoided the Arm IPO frenzy. Here’s why

    Arm, the U.K.-based company controlled by Japanese investment giant SoftBank, listed on New York’s Nasdaq on Thursday at an IPO price of $51 per share for a valuation of almost $60 billion.
    The initial buzz has since fizzled, with the stock suffering successive daily declines to close the Tuesday trading session at $55.17.

    Cathie Wood, CEO of Ark Invest, speaks during an interview on CNBC on the floor of the New York Stock Exchange (NYSE) in New York City, February 27, 2023.
    Brendan McDermid | Reuters

    Ark Invest CEO Cathie Wood said she did not participate in Arm’s blockbuster initial public offering last week because she finds the chip designer was overvalued relative to its competitive position.
    Arm, the U.K.-based company controlled by Japanese investment giant SoftBank, listed on New York’s Nasdaq on Thursday at an IPO price of $51 a share for a valuation of almost $60 billion. The shares jumped almost 25% on the first day of trading to close at $63.59.

    The initial buzz has since fizzled, with the stock suffering successive daily declines to end the Tuesday trading session at $55.17.
    Speaking on CNBC’s “Squawk Box Europe” on Wednesday, Wood said the recent frenzy around AI-exposed companies was justified and that “innovation is undervalued given the enormous opportunities that we see ahead, catalyzed very importantly by artificial intelligence.”
    “As far as Arm, I think there might be a little bit too much emphasis on AI when it comes to Arm and maybe not enough focus on the competitive dynamics out there,” she added.

    Arm CEO Rene Haas and executives cheer, as Softbank’s Arm, chip design firm, holds an initial public offering (IPO) at Nasdaq Market site in New York, U.S., September 14, 2023.
    Brendan Mcdermid | Reuters

    “So we did not participate in that IPO, and we also compare it to the stocks in our portfolios. Arm came out, we think, from a valuation point of view on the high side, and we see within our portfolios much lower-priced names with much more exposure to AI.”
    Arm declined to comment.

    The top holdings in Wood’s flagship Ark Innovation ETF include Tesla, Shopify, UiPath, Unity, Zoom, Twilio, Coinbase, Roku, Block and DraftKings.
    After taking a beating during the recent cycle of aggressive interest rate hikes from the U.S. Federal Reserve, the Ark ETF resurged this year, as investors flocked to stocks with AI exposure. Wood said that the anticipation of interest rates peaking would further this trend.
    “The appetite for innovation is stirring here, and I think one of the reasons is because many investors and analysts are starting to look over the interest rate hike moves we’ve seen, record breaking in the last year or so, and to the other side,” she said.

    With inflation coming down across major economies and with central banks expected to begin unwinding their aggressive monetary policy tightening over the next year, Wood suggested the coming period “should be a very good environment for innovation and global megatrend strategies.”
    Ark Invest acquired British thematic ETF issuer Rize ETF late Tuesday for £5.25 million ($6.5 million), marking the company’s first venture into the European passive investment market.
    Wood said that Europe has not had access to actually invest in the company’s U.S.-based ETFs until now, despite accounting for around 25% of demand for the company’s research since Ark’s inception in 2014.
    “The cost of technology, especially with artificial intelligence now, is collapsing, and therefore it’s going to be much easier to build and scale tech companies anywhere in the world. This is no longer just the purview of Silicon Valley,” Wood said. “We are very open-minded about technologies flourishing throughout the world, including Europe.”
    Correction: This story has been updated to reflect the date of Ark Invest’s acquisition of Rize ETF. More

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    in Finance

    Apple and Goldman were planning stock-trading feature for iPhones until markets turned last year

    Apple was exploring the launch of an iPhone feature that would let users buy and sell stocks, according to three sources familiar with the plans.
    The offering would have been in partnership with Goldman Sachs, which has worked with Apple on other financial products. 
    The iPhone maker decided the timing wasn’t right as markets slumped, and the company put the plan on pause, sources say.

    Apple CEO Tim Cook holds a new iPhone 15 Pro during the ‘Wonderlust’ event at the company’s headquarters in Cupertino, California, U.S. September 12, 2023. 
    Loren Elliott | Reuters

    As equities soared in 2020 and consumers flocked to trading apps like Robinhood, Apple and Goldman Sachs were working on an investing feature that would let consumers buy and sell stocks, according to three people familiar with the plans.
    The project was shelved last year as the markets turned south, said the sources, who asked not to be named because they weren’t authorized to speak on the matter.

    The effort, which has not been previously reported, would have added to Apple’s suite of financial products powered by Goldman. Apple first teamed up with the Wall Street bank to offer a credit card in 2019, and then added buy now, pay later (BNPL) loans and a high-yield savings account. The company said last month that the savings account offering had climbed past $10 billion in user deposits.
    Representatives for Apple and Goldman declined to comment.
    Apple was working on the investing feature at a time of zero interest rates during Covid, when consumers were stuck at home and spending more of their time and their record savings in trading shares, including meme stocks like GameStop and AMC, from their smartphones.
    Apple’s conversations with Goldman began during that hype cycle in 2020, two sources said. Their work progressed, and an Apple investing feature was meant to roll out in 2022. One hypothetical use case pitched by executives involved the ability for iPhone users with extra cash to put money into Apple shares, one person said.
    But as markets were roiled by higher rates and soaring inflation, the Apple team feared user backlash if people lost money in the stock market with the assistance of an Apple product, the sources said. That’s when the iPhone maker and Goldman switched directions and pushed the plan to launch savings accounts, which benefit from higher rates.

    The status of the stock-trading project is unclear after Goldman CEO David Solomon bowed to internal and external pressure and decided to retrench from nearly all of the bank’s consumer efforts. One source said the infrastructure for an investing feature is mostly built and ready to go should Apple eventually decide to move forward with it.

    Source: Apple

    The Apple Card launched with much fanfare three years ago, but the business brought regulatory heat and racked up losses as its user base expanded. Earlier this year, Goldman rolled out a high-interest savings account for Apple Card users, offering a 4.15% annual percentage yield.
    Goldman was also central to Apple’s BNPL offering. The product, called Apple Pay Later, can be used for purchases of $50 to $100 “at most websites and apps that accept Apple Pay,” according to the support page. Borrowers can split a purchase into four payments over six weeks without incurring interest or fees.
    Before Goldman’s pivot away from retail banking, the company examined ways to expand its partnership with Apple, sources said. More recently, Goldman was in discussions to offload both its card and savings account to American Express.
    Had plans for the trading app progressed, Apple would have entered a market with stiff competition, featuring the likes of Robinhood, SoFi and Block’s Square, along with traditional brokerage firms such as Charles Schwab and Morgan Stanley’s E-Trade.
    Stock trading has become another way for financial firms to keep customers and drive engagement on their platforms. Apple was pursuing the same approach, one source said. It’s a move that could capture the interest of regulators, who have scrutinized Apple for its App Store practices. Robinhood has also been grilled by regulators for what they described as “gamifying” markets.
    Other tech companies have been pushing into the space. Elon Musk’s X, formerly known as Twitter, is working on a way to let users buy stocks and cryptocurrencies through a partnership with eToro. PayPal had plans to launch stock trading after hiring a key industry executive in 2021. But the company abandoned those plans, and said on an earnings call that it would cut spending and refocus on its core e-commerce business.
    WATCH: Goldman’s Apple Card faces mounting credit losses More

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    UK inflation dips to 6.7%, below expectations as food prices ease

    On a monthly basis, the headline consumer price index (CPI) rose by 0.3%.
    Economists polled by Reuters expected the headline figure to come in at 7% annually and up 0.7% month-on-month amid a slight uptick in prices at the pump.

    A shopper browses fruit and vegetables for sale at an indoor market in Sheffield, UK. The OECD recently predicted that the UK will experience the highest inflation among all advanced economies this year.
    Bloomberg | Bloomberg | Getty Images

    U.K. inflation surprised with a dip to 6.7% in August, below expectations and sparking increased bets on a pause in interest rate hikes from the Bank of England on Thursday.
    On a monthly basis, the headline consumer price index (CPI) rose by 0.3%.

    Economists polled by Reuters expected the headline figure to come in at 7% annually and up 0.7% month-on-month amid a slight uptick in prices at the pump. July saw a 6.8% annual rise and a 0.4% month-on-month decline.
    “The largest downward contributions to the monthly change in both CPIH and CPI annual rates came from food, where prices rose by less in August 2023 than a year ago, and accommodation services, where prices can be volatile and fell in August 2023,” the Office for National Statistics said.
    “Rising prices for motor fuel led to the largest upward contribution to the change in the annual rates.”
    Core CPI — which excludes volatile food, energy, alcohol and tobacco prices — came in at 6.2% in the 12 months to the end of August, down from 6.9% in July. The goods rate rose slightly from 6.1% to 6.3% but was more than offset by the services rate slowing significantly from 7.4% to 6.8%.
    Raoul Ruparel, director of Boston Consulting Groups’ Centre for Growth, said this unexpected fall in core inflation would be particularly welcomed by policymakers, along with signs that retail prices are beginning to ease for consumers.

    “This, combined with nominal wage growth, suggests real wages will continue to pick up towards the end of the year. Together, this will be a relief for households, but it is also a further sign that the economy looks to be slowing,” Ruparel said in an email on Wednesday.
    “We believe the Bank of England will still raise rates tomorrow, but today’s data will embolden those pushing for this to be the final rate hike. However, it also highlights the challenge for the Bank of England with the economy now showing signs of cooling and the full impact of the rate rises not being felt.”
    The Bank of England will announce its next monetary policy decision on Thursday, as policymakers continue efforts to pull inflation back down towards the Bank’s 2% target.
    The market has broadly priced in another 25-basis-point hike to interest rates, which would take the main bank rate to 5.5% — its highest level since December 2007.
    In light of the downside inflation surprise on Wednesday, market pricing for a pause from the Bank of England jumped from 20% to almost 50% at around 7:40 a.m. London time.
    Caroline Simmons, U.K. chief investment officer at UBS, told CNBC that the central bank will still most likely hike on Thursday.
    “We do believe that’s going to be their last hike, however, because we do have these downward forces on inflation,” she added.
    “I think the recent rise in the oil price made people nervous that the print this morning might not continue to fall, which is why people sort of had more upside risk to their numbers, but I think the general trend is down.” More

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    Here’s everything the Fed is expected to do Wednesday

    There’s virtually no chance the U.S. central bank will choose to raise its benchmark borrowing rate when its two-day meeting concludes Wednesday.
    The meeting will feature the Fed’s quarterly update on what it expects for a bevy of key indicators — interest rates, gross domestic product, inflation and unemployment.
    There’s widespread belief the Fed will make sure the market knows that it shouldn’t make assumptions about what’s next.

    Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a Federal Open Market Committee meeting, at the Federal Reserve in Washington, DC, on July 26, 2023. 
    Saul Loeb | AFP | Getty Images

    As often has been the case, this week’s Federal Reserve meeting will be less about what policymakers are doing now than what they expect to be doing in the future.
    In the now, there’s virtually no chance the U.S. central bank will choose to raise its benchmark borrowing rate. Markets are pricing in just a 1% chance of what would be the 12th hike since March 2022, according to CME Group data.

    But this week’s meeting, which concludes Wednesday, will feature the Fed’s quarterly update on what it expects for a bevy of key indicators — interest rates, gross domestic product, inflation and unemployment.
    That is where the suspense lies.
    Here’s a look at what to expect.

    Interest rates

    The Fed won’t be tinkering with its key funds rate, which sets what banks charge each other for overnight lending but also spills over into many forms of consumer debt.
    Historically, and in particular during the era under Chair Jerome Powell, the Fed doesn’t like to buck markets, especially when anticipation is running so strongly in one direction. The funds rate is a lock to stay in its current target range of 5.25%-5.5%, its highest level since the early part of the 21st century.

    There’s widespread belief, though, that the Fed will make sure the market knows that it shouldn’t make assumptions about what’s next.

    “There’s likely to be a pause here, but a clear possibility that the November meeting is, as they say, a live meeting. I don’t think they’re ready to say, ‘We are now done,'” Roger Ferguson, a former vice chair of the Fed, said on CNBC’s “Squawk Box” in an interview this week.
    “This is the time for the Fed to proceed very cautiously,” he added. “In no way should they say we are completely done, because I don’t think they really know that just yet, and I think they want to have the flexibility to do one more if need be.”

    The dot plot

    One way for the central bank to communicate its intentions is through its dot plot, a grid that anonymously lays out individual members’ expectations for rates ahead.
    Markets will be looking for subtle shifts in the dots to understand where officials see things headed.
    “I think that they will keep that bias towards higher rates in there and indicate that they are willing to raise the funds rate further if the data start to show that either inflation is not slowing as they expect it to, or if the labor market remains too tight,” said Gus Faucher, chief economist at PNC Financial Services Group.
    One key “tell” market participants will be focusing on: the “longer run” median dot, which in Wednesday’s case will be the projection beyond 2026. At the June meeting, the median outlook was for 2.5%.
    Should that shift higher, even by a quarter percentage point, that could be a “tacit” signal the Fed will be content to let inflation run higher than its 2% target and possibly rattle markets, said Joseph Brusuelas, chief economist at RSM.
    “We’re laying the groundwork to prepare our clients for the inflation targets we think [will] be going up,” he said.

    The SEP

    Each quarter the Fed updates its Summary of Economic Projections, or the outlook for rates, inflation, GDP and unemployment. Think of the SEP as the central bank laying a trail of policy breadcrumbs — a trail, unfortunately, that often has left something to be desired.
    Particularly over the past several years, the projections have been notably wrong as Fed officials misread inflation and growth, leading to some dramatic policy adjustments that have kept markets off balance.
    In this week’s iteration, markets largely expect the Fed to show a sharp upgrade in its June projection for GDP growth this year, along with reductions in its outlook for inflation and unemployment.
    “The Fed is going to have to almost double its growth forecasts,” Ellen Zentner, chief U.S. economist at Morgan Stanley, said Tuesday on CNBC’s “Worldwide Exchange.”

    The statement

    While the SEP and dot plot will attract the most attention, potential tweaks in the post-meeting statement also could be a focal point.
    Zentner suggested the Fed could change some of its characterizations of policy as well as its view on the economy. One potential adjustment from the July statement could be in the sentence, “In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
    Removing the word “additional,” she said, would send a signal that members of the Federal Open Market Committee are at least considering that no more rate hikes will be needed.

    A second potentially potent change would be if in the sentence, “The Committee remains highly attentive to inflation risks,” the Fed were to removed the word “highly.” This could indicate the Fed is growing less concerned about inflation.
    “These are tiny little tweaks that shouldn’t be taken lightly, and they would be baby steps toward stopping the hiking cycle,” Zentner said.

    The press conference

    Following the release of the statement, the dot plot and the SEP, Powell will take the podium to take questions from reporters, an event that generally lasts about 45 minutes.
    Powell uses the conference to amplify what the FOMC has already done. He also sometimes has a somewhat different spin from what comes out of the official documents, making the events unpredictable and potentially market-moving.
    Markets are betting the Fed has finished this rate-hiking cycle, assigning just a 30% chance to a November increase. If the chair does anything to disabuse the market of that sentiment, it would be meaningful.
    Zentner, though, expects the central bank to fall in line with market thinking.
    “We do believe that the Fed is done here,” she said. “They just don’t know it yet.” More