When is Powell testimony?
Powell will testify to the House Financial Services Committee at noon on Wednesday and on Thursday, he will appear before the Senate Banking Committee at 9:30 a.m. Eastern. MarketWatchPowell will stress patience in Capitol Hill testimony this week
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Federal Reserve Chairman Jerome Powell appears Thursday before the Senate Committee on Banking, Housing and Urban Affairs to conclude his two-day appearance on Capitol Hill to discuss the economy and the future of monetary policy.
On Wednesday, when he appeared before the House Financial Services Committee, the central bank chief said the Fed will wait until the employment picture gets better before changing its approach.
He faced grilling from several members on the surge in inflation, which Powell believes to be temporary and caused by factors related to the pandemic that eventually will fade.
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15 July, 2021 - 01:45pm
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The current second-quarter earnings season feels like a game of Russian roulette. Each major company report has the potential to sway investor sentiment, which is already shaky. There’s a sense a sea change has begun—one that could change the assumptions that have supported the stock market for the past 12 years.
Federal Reserve Chairman Jerome Powell recently told Congress that the central bank’s easy-money policies were unlikely to change soon. Investors are adopting a trust-but-verify approach.
This level of skepticism has rarely been seen since the tense hours of the 2007-09 financial crisis, when earnings reports were highly valued because they offered investors a chance to use corporate data to verify what government officials were saying.
Now, like then, there is a lot to verify, especially about inflation, which the Fed contends is transitory even if it is at the highest level in more than a decade. The mismatch likely explains why many investors have hedged their stock portfolios at the onset of earnings season.
Moreover, the benchmark indexes are increasingly dominated by a small group of stocks, which might be masking problems, Steve Sosnick, the chief strategist at Interactive Brokers, tells Barron’s.
“Narrowing leadership often leads to trouble, because if something induces people to lighten positions, you will have a lot of people trying to squeeze through the small door of those stocks that they bought on the way up,” he says.
Get a summary of the latest online exclusive coverage from Barron's including daily columns, features on investing ideas and more.
Investors, in turn, are buying more put options, which increase in value when stock prices tumble—a move that has attracted a lot of attention because it has historically been a money-losing decision for as long as the so-called Fed put has existed. Stock prices have almost continually advanced since 2009 because the Fed’s policies have kept stock prices aloft.
While hedging makes some sense, it is perhaps better to be opportunistically patient. Compile a list of equities to buy, or buy more of, and wait for the chaos that could be triggered by a surprise earnings report.
For clues, watch the Cboe Volatility Index, or VIX. The fear gauge is still relatively sanguine at just over 16. Should it spike into the high 20s or low 30s, it may mark a good time to buy quality stocks that you can hold for a few years. There is nothing profound in this simple approach, but it often works.
Extreme fear distorts prices and leads people to make bad decisions. If you have a plan to buy stocks, anything that scares others is an opportunity. If that dark day never comes, at least it provides a way to sort through all the palaver that surrounds the stock market.
Everyone will have their own preferred way of monetizing fear. Some sell puts in the middle of a maelstrom. Others buy stocks and even sell call options at the same time. There is no right way. The key is using fear as an ally to buy well-run companies like PepsiCo (ticker: PEP), which just reported good earnings and increased its 2021 earnings forecast, or to position in controversial stocks with intriguing prospects, like Tesla (TSLA).
The wild card remains the Fed. It has been a long time since interest rates—and the cost of capital—weren’t low. Under those conditions, it makes sense to seek returns among riskier assets. An entire generation of investors knows nothing but low rates, and risk takers have often grown rich.
The current risks of rising rates and inflation are real. But the strategy of buying blue-chip stocks that pay dividends, and holding them in one’s portfolio for years as returns and dividends compound, is a battle-tested approach.
The current second-quarter earnings season feels like a game of Russian roulette.
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15 July, 2021 - 09:13am
US futures contracts on the Dow, S&P, NASDAQ and Russell 2000 have been trading unevenly ahead of the US session on Thursday and most are currently heading lower. Equities in Europe declined along with the price of oil, pressured by rising stockpiles, as traders weighed slowing expansion in China with yesterday's dovish rhetoric from Fed Chair Jerome Powell.
Yields returned to declines and gold is currently rising.
In a show of force for tech stocks, which outperformed during coronavirus lockdowns, contracts on the NASDAQ 100—the index most associated with growth stocks—were the only ones in the green at time of writing, +0.13%. On the opposite end of the cyclical rotation, Russell futures—whose small cap domestic firms listed on the underlying index benefit from economic recovery—were 1.6% in the red, with futures on the Dow—whose listed blue-chip megacaps also represent the value sector—0.5% in negative territory.
European shares extended Wednesday’s drop, pressured by the oil majors as well as weakening commodity prices. However, stocks on the other end of the spectrum, including wind energy, also fell as “another big stock-market rotation is underway," according to the Wall Street Journal, while US inflation, which is showing no signs of slowing, is at its highest level since 2008.
Earlier, Thursday's Asian session painted an unclear picture for traders. Japan’s Nikkei 225 led the declines, with a 1.1% loss, as a stronger yen drove stocks lower, one month after Japanese exports surged by almost 50%, recording the sharpest rise in 41 years.
As the world’s fourth largest importer and exporter of goods, with foreign trade accounting for over a third of the country’s GDP, a stronger yen renders their exports less competitive on the global market, potentially upsetting its trade balance.
The dollar-yen pair was threatening to complete a small H&S top, after falling out of its rising channel. Volume, momentum and a broad spectrum of pricing—all provided negative divergences to the pair’s advance since the Apr. 23 low.
JPMorgan strategist, Mixo Das is suggesting that now may be the ideal time to invest in Asian stocks, with light trade positioning, tempered valuations and expectations of 60% to 70% annual growth in corporate results.
Megacaps led a rally during yesterday’s US session led by defensive stocks. The Energy sector plummeted 3%, more than 6 times the second-worst performer, Financials, which declined less than 0.5%, after Federal Reserve Chair Jerome Powell outlined why monetary stimulus should remain in his testimony to Congress. Powell argued that the recovery, such as it is, does not thus far warrant scaling back the Fed’s unprecedented support.
Ironically, up until now whenever the economy looked like it may be in difficulty, investors have turned extremely bullish, counting on continued ultra-loose accommodation from the Fed to support markets. This is the first time in memory that stocks only rose slightly with Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT)—the usual suspects to benefit from a slowing economy—reaching records.
Yields on the 10-year Treasury note fell for the second day, below 1.4%, after Powell warned inflation—which he has been consistently downplaying since the start of the year—is likely to remain high in the coming months, before easing. This rhetoric suggests the Fed will be tolerant of inflation overshooting their 2.00% target, before it tightens.
Yields crossed below the 200 DMA, completing a rising flag, bearish after the preceding sharp decline, following a bearish triangle, which followed a top. In this chain of bearish patterns, rates will now test the bottom of the faster (red) declining falling channel.
The dollar dipped lower for the second day, at a more tempered rate than the slide in yields.
Bitcoin fell further, to its lowest level since June 25.
Oil extended a selloff after data revealed US stockpiles gained, and China angles to competes with the US as the world’s largest refinery. Chinese companies processed a record volume of crude in June. Meanwhile OPEC+ is nearing a deal.
Crude’s second day decline found support at the neckline of a small H&S top, whose bearish outlook is supported by both the MACD and the RSI. For clues to the demand side of the oil equation, there's one surprising metric traders should watch.
Fed Chair Powell on Wednesday maintained both patience and dovish narrative, despite the blockbuster US CPI and PPI reports for June. US 7s to 30s slid more than 6bp, reversing the...
Consumer inflation in the US remained surprisingly hot in June, the Labor Department reported yesterday. Taken at face value, the numbers raise more doubts about the Federal...
As the markets react to the somewhat shocking CPI and inflation data while Q2 2021 earnings continue to roll across the news wires, we wanted to take a minute to explore the recent...
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15 July, 2021 - 12:30am
German Chancellor Angela Merkel visits the White House to meet with President Biden. Discussions over the Nord Stream 2 will likely be on their agenda.
Fed Chair Powell and Chicago Fed President Evans speak in the afternoon. The US Empire and Philly fed manufacturing indices for July are also due out and a key question will be whether supply disruptions and input cost pressures are starting to ease.
Early Friday morning, we expect Bank of Japan will keep policies unchanged. Renewed restrictions in Tokyo will keep the domestic economy weak well into Q3 and postpone any potential withdrawal of the pandemic stimulus. It will be interesting to see the details on the BoJ's new scheme to boost funding for activities related to climate change.
Climate: The European Commission unveiled its decarbonisation strategy to cut CO2 emissions by 55% by 2030 ("Fit for 55 package") yesterday. It included an expanded EU Emissions Trading Scheme now adding shipping industries on top of energy and industry sectors as well as a separate new emissions trading scheme for road transport and buildings. So far it is only proposals that will require backing from both the EU parliament and a qualified majority in the EU Council to come into force. See Reuters for more.
Sweden: CPI inflation declined from 1.8% to 1.3% in June in line with the Riksbank's forecast. Thus also muted market reaction.
Equities: Yesterday, Wall Street shares were mixed, with S&P500 ending 0.1% higher and Nasdaq down 0.2%. This morning, Asia is trading slightly lower despite support from Fed chair Powell's reassurance there will be no tapering yet. MSCI's broadest index of Asia-Pacific shares outside Japan is down 0.3% and Nikkei plunged 0.9% weighed down by another surge in COVID-19 cases.
FI: US government bond yields continue to decline despite the stronger than expected US inflation data. However, the Federal Reserve is not about to scale back on the monetary stimulus given yesterday's comments from Federal Reserve chairman Powell. He stated that the US economy has not progressed enough to begin scaling back on QE and that inflation was expected to rise further before falling back later this year. Hence US yields declined and the curve flattened as the Federal Reserve is willing to let the economy gather more steam and inflation to rise before scaling back on the monetary stimulus.
FX: Apart from the Reserve Bank of New Zealand (RBNZ) induced NZD strength yesterday was a fairly quiet day for FX majors with very limited moves. NZD gained on RBNZ finishing its QE programme already this July and implicitly signalling an earlier rate hike (May rate path suggested H2 2022). Lower commodity prices following a peak in the global manufacturing cycle as well as New Zealand's low vaccine coverage (16% of population) are some of the downside risks for NZD/USD, even if RBNZ goes forward with the early rate hikes. We emphasize that relative rates are important yet often prove an inferior driver of FX markets compared to global investment themes.
Credit: Credit indices were mixed Wednesday on softer market sentiment following US inflation numbers. iTraxx Xover widened 1.2bp (closed at 233.4bp) and iTraxx Main widened 0.25bp (closed at 46.8bp). HY cash bonds were slightly tighter (-0.8bp) IG cash bonds were marginally wider (+0.4bp).
EUR/USD remains pressured and trades around 1.1800 as the dollar maintains a positive tone. The greenback is benefiting from a cautious market mood after somewhat disappointing US data. Fed Chair Powell maintained his conservative stance.
GBP/USD is trading below the 1.3850 price zone, off the highs it hit after the BOE's Saunders urged cutting short support to the economy. Dollar strengthens as yields fall while stocks bounce off lows.
Gold has retreated after benefiting from the Fed's dovish message. The Confluence Detector is showing strong support. Gold achieves forecasted levels
Bitcoin price has reacted positively after dipping into the demand zone, extending from $30,573 to $31,979. A continuation of this uptrend will likely propel BTC by 11% to the 50% Fibonacci retracement level at $35,618.
Fed Chair Powell's testimony gives Wall Street a boost. Dollar falls back as taper expectations are tapered. FTSE 100 in the red but miners gain as commodity prices rally
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14 July, 2021 - 10:13am
* Powell reiterates inflation spike will be transitory
* RBNZ stimulus reduction surprise jolts Kiwi dollar higher
By Herbert Lash and Carolyn Cohn
NEW YORK/LONDON, July 14 (Reuters) - A gauge of global stocks prices rose on Wednesday and bond yields edged lower after U.S. Federal Reserve Chair Jerome Powell reassured investors an inflation spike will be transitory, although it may linger for awhile.
Powell reiterated in prepared congressional testimony that inflation will remain anchored around the Fed's 2% target and the U.S. economy was "still a ways off" from levels the Fed wanted to see before tapering its stimulus support.
Powell's prepared remarks relieved investors who were concerned inflation data would prompt him to signal the beginning of tapering, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston. He noted that U.S. producer prices surged in June to the largest annual gain in more than 10-1/2 years.
"Both the CPI yesterday and the PPI today came in considerably above expectations and signaled that inflation continues to run hot," he said. "Even in the face of that Powell has stood steadfast."
The yield on the 10-year Treasury note slid 5.1 basis points to 1.3643%, the dollar eased and stocks on Wall Street opened higher.
MSCI's all-country world index rose 0.2% after matching Tuesday's record intra-day high of 728.77. The broad pan-European FTSEurofirst 300 index slid 0.06% and other equity indices in Europe were also lower.
On Wall Street, the Dow Jones Industrial Average rose 0.27%, the S&P 500 added 0.39% and the Nasdaq Composite advanced 0.52%.
Overnight in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.25% as Chinese blue-chips fell 1.15%. Japan's Nikkei dipped 0.38%.
The Bank of Canada held its key overnight interest rate at a record low 0.25% as expected on Wednesday and said it would cut its weekly net purchases of government bonds to a target of C$2 billion ($1.6 billion) from C$3 billion.
The Canadian dollar edged lower to 1.2499 per U.S. dollar.
The New Zealand dollar shot up 0.92% as markets bet an interest rate hike is imminent after the central bank on Wednesday unexpectedly announced it would end its bond purchase program from next week.
The dollar index, which tracks the greenback versus a basket of six currencies, fell 0.414% to 92.39.
The euro was up 0.42% at $1.1824, while the yen traded down 0.56% at $109.9900.
President Joe Biden's administration is continuing to push for fiscal stimulus to boost the U.S. economy. Late on Tuesday, Democrats on the U.S. Senate Budget Committee reached an agreement on a $3.5 trillion infrastructure investment plan they aim to include in a budget resolution to be debated this summer.
German 10-year Bund yields were little changed at -0.293% after Germany sold 3.392 billion euros in a top-up of its 0.00% 10-year Bund.
Oil fell after data showed China's first-half crude imports dropped 3% from January to June versus a year earlier.
Brent crude was down $0.41 at $76.08 a barrel. U.S. crude was down $0.55 at $74.7 a barrel.
(Reporting by Herbert Lash, Additional reporting by Carolyn Cohn in London, Andrew Galbraith in Shanghai; Editing by Timothy Heritage, Mark Heinrich and David Gregorio)
Look out to the downside if the 10-year U.S. Treasury yield falls below its July 8 close at 1.30%.
The U.S. job market "is still a ways off" from the progress the Federal Reserve wants to see before reducing its support for the economy, while current high inflation will ease "in coming months," Fed Chair Jerome Powell said in remarks prepared for delivery at a congressional hearing on Wednesday. "Inflation has increased notably and will likely remain elevated in coming months before moderating," Powell said, restating the U.S. central bank's faith that current price increases, despite the concerns they are raising about unmoored inflation, are tied to the reopening of the economy and will prove fleeting. Meanwhile "there is still a long way to go" in repairing a labor market that is 7.5 million jobs away from its pre-pandemic level, with the burden falling hardest on lower-wage workers and major ethnic and minority groups, and the overall participation rate still depressed, Powell said.
NEW YORK (Reuters) -The dollar pared recent gains on Wednesday after Federal Reserve Chair Jerome Powell told Congress the U.S. economy was "still a ways off" from levels the central bank wanted to see before tapering its monetary support. The strong inflation has lifted the greenback to just shy of its three-month high, as focus sharpened on when central banks around the world will begin withdrawing pandemic-era stimulus. That focus intensified on Wednesday after the Reserve Bank of New Zealand said it was ending bond purchases, raising expectations it could raise interest rates as soon as August.
(Bloomberg) -- Zomato Ltd., the Indian food delivery startup backed by Jack Ma’s Ant Group Co., got about 35 times more bids from anchor investors than it intended to sell in its blockbuster initial public offering, according to people with knowledge of the matter.The Gurgaon-based firm received bids worth 1.5 trillion rupees ($20 billion) from large funds compared with the 42 billion rupees offered, the people said, asking not to be identified as the information is private. The subscription mar
BlackRock Inc Chief Executive Larry Fink said he does not see inflation as transitory and that the U.S. Federal Reserve will have to react to higher inflation numbers. "I am not calling for 1970's inflation but I just think we are going to have above 2% inflation .. probably closer to 3.5% to 4.0%," Fink said in an interview with Reuters.
(Bloomberg) -- Megacap tech stocks led the S&P 500 marginally higher and bond yields fell as investors turned to defensive favorites with Federal Reserve Chairman Jerome Powell making the case for maintaining economic stimulus.The S&P 500 closed slightly higher with Powell emphasizing in Congressional testimony that the U.S. economic recovery still hasn’t progressed enough to begin scaling back asset purchases. Apple, Google parent Alphabet and Microsoft hit record highs. Bank of America dropped
U.S. stock index futures edged higher on Wednesday helped by a rise in mega-cap technology stocks, as investors awaited Federal Reserve chair Jerome Powell's testimony and more earnings reports from big banks poured in. Powell is set to appear before Congress on Wednesday and Thursday, and many will be watching for signs if the central bank would alter its stance on rising consumer prices, which it has said are transitory and may begin unwinding its easy-money policies sooner than expected. Data on Tuesday indicated U.S. consumer prices rose by the most in 13 years last month, pulling the S&P 500 and the Nasdaq from intraday record highs, and taking shine off strong earnings from JPMorgan Chase & Co and Goldman Sachs Group Inc that kicked off the quarterly reporting season.
LONDON (Reuters) -Darktrace, the cybersecurity company that listed in April, upgraded its guidance for 2022 on Thursday as it said revenue for the financial year just ended would grow by a better-than-expected 40% plus to at least $278 million. Shares in the British company, which were priced at 250 pence in the IPO, jumped 15% to a new high of 664 pence after the update. Chief Executive Poppy Gustafsson said demand for Darktrace's AI solutions was "robust, as advanced cyber-attacks continue to outpace the human capability of security teams".
The Dow Jones Industrial Average rallied 150 points Wednesday, as Fed chief Powell reassured investors. Apple stock jumped on iPhone news.
(Bloomberg) -- U.K. Prime Minister Boris Johnson said he’s “not attracted” to the idea of extra taxes on food, after a review called for a broad levy on sugar and salt sales as poor diets hurt the economy and people’s health.The government-commissioned National Food Strategy urged Britain to introduce the world’s first sugar and salt reformulation tax, and use some of the proceeds to expand free school meals and support diets in deprived communities. It stopped short on recommending a levy on me
As graphics card prices start sliding, NVIDIA investors may have to relive a torrid time in the company's history.
Shares of Moderna (NASDAQ: MRNA) were jumping 4.3% as of 11:10 a.m. EDT on Thursday, hitting another record high for the stock. The bump came after Michael Yee, an analyst at Jefferies, increased his price target on the stock from $170 to $250. Also, Dr. Marco Cavaleri, the European Medicines Agency (EMA) head of biological health threats and vaccines strategy, stated in a press conference that a committee would likely finalize a decision on recommending authorization for Moderna's COVID-19 vaccine in children by the end of next week.
Alibaba (NYSE: BABA) is arguably China's most well-known tech company. It owns the country's largest online marketplaces, Taobao and Tmall, and its largest cloud infrastructure platform, Alibaba Cloud. Alibaba went public in September 2014 and it remained a solid growth stock over the next six years.
ClearBridge Investments, an investment management firm, published its “Large Cap Growth Strategy” second quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Large Cap Growth Strategy underperformed its Russell 1000 Growth Index benchmark during the second quarter. On an absolute basis, the Strategy had gains across seven of the […]
Shares of embattled electric pickup start-up Lordstown Motors (NASDAQ: RIDE) were trading higher on Thursday. In March, short-seller Hindenburg Research alleged that Lordstown (among other things) exaggerated the number of pre-orders it had for its Endurance pickup truck. Lordstown denied the allegations, but the Securities and Exchange Commission opened an investigation.
Plug just barely, while Nikola's 3.4% and Jinko's 4.5% gains remain more respectable. In the case of Plug Power, the answer is easy: An upgrade -- or more precisely, a new buy rating, from Seaport Global Securities, which initiated coverage of the $26 stock today with a price target of $36.
Recent data suggests the red-hot housing market shows no signs of slowing. Digital real estate company Zillow could be set to exceed all expectations.
In this article, we will be looking at the 10 best dividend kings to buy now according to hedge funds. If you want to skip our detailed analysis of dividend investing, you can go directly to the 5 Best Dividend Kings to Buy According to Hedge Funds. The economic and financial volatility that came as […]
Prospective profit-takers took decided action today, but there may well be more of the same to come.