Fed Signals Winding Down Balance Sheet “Relatively Soon.” Facebook Posts Strong Earnings

U.S. stock index futures are pointing to a higher opening on Friday with the dollar weakening against the euro after investors weigh the outcome of yesterday’s July Federal Reserve meeting that saw the U.S. central bank not raising interest rates amid increased speculation that the Fed will begin winding down their $ 4.5 trillion balance sheet consisting of Treasuries and mortgage backed securities sooner than expected.

The Federal Reserve kept interest rates unchanged at their July policy meeting as expected.

In their released statement, the Fed wrote that when determining the timing and size of future adjustments with the federal funds rate, they will weigh a wide range of information, including labor market conditions, inflation pressures, inflation expectations, and readings on financial and international developments.

Committee members at the Fed also signaled that they plan to wind down their large balance sheet and begin implementing its balance sheet normalization program “relatively soon” provided that the economy evolves broadly as anticipated.

Previous statements that the Federal Reserve have released suggested more broadly that “balance sheet normalization” would occur sometime this year.

Facebook Beats With Strong Earnings 

Facebook posted a stronger than expected Q2 earnings report that saw Q2 total revenue up 45 percent, boosted by ad revenue that increased 47 percent to $9.2 billion.

Net income was $3.9 billion or $1.32 per share.

According to Zacks Investment Research from 14 analysts’ forecasts, the consensus EPS forecast for Q2 quarter was $1.13.

David Wehner, CFO at Facebook, noted in the earnings call that in June, 1.32 billion people visited Facebook on an average day, up 17 percent compared to last year.

Sheryl Sandberg, COO at Facebook, also explained that mobile ad revenue grew 53 percent year over year to 8.0 billion, representing 87 percent of total ad revenue.

Written and Edited By:

Johnathan Schweitzer



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