Medicare Agent News: Corporate America Is Cashing In

Tuesday, March 7, 2023

Corporate America Is Cashing In

By Alex Eule | Monday, March 6

Powell Goes to Washington. The day started with renewed optimism. One of the market's more prominent bears, Mike Wilson of Morgan Stanley, said stocks had passed a crucial test last week and looked poised for more gains.

"Equity markets went right to the brink of the critical support levels we discussed, and held," Wilson wrote about the charts and levels watched carefully by technical analysts. "More importantly, they reacted strongly from those levels, which suggests this will not be a one day wonder and the bear market rally is not yet over."

Sure enough, stocks rallied out of the gate this morning, with the Nasdaq Composite up as much as 1.2% by 11 a.m. For a short period, investors seemed to be growing more optimistic that the Federal Open Market Committee (FOMC) would stick with its more dovish approach of a quarter-point rate increase at the late March meeting.

Fed Reserve Chairman Jerome Powell will spend the next two days testifying on Capitol Hill for his "Semiannual Monetary Policy Report to the Congress." Tomorrow's hearing, in front of the Senate Banking Committee starts at 10 a.m. You can stream the event here.

Powell's comments -- in any venue -- are always closely watched by the markets. Here's what UBS economist Jonathan Pingle is looking for:

We expect him to repeat the message that he has been delivering since the February FOMC meeting of data dependence and more work to do...Chair Powell likely has two goals for this testimony. One, he needs to prepare Congress that the FOMC expects to continue to raise rates. How high? he does not know, so the best answer will probably be data dependence. As high as it takes to assure inflation is at least on a trajectory back to price stability. Two, he needs to defend that policy. Price stability is the "bedrock of our economy," a phrase he has been using, is a start.

Thomas Block, FundStrat's Washington policy strategist, writes that investors need to keep the broader D.C. context in mind:

During my Congressional staff career I prepared House and Senate Members for hearings and I know these session are more an opportunity for face time on television for the Representatives and Senators than a true search for the truth. Many of the Members want to press the Chair in the hope that their question will be the one that makes the evening news.

Anything Powell says tomorrow could quickly be overtaken by other news. The February jobs report is due out on Friday, with economists expecting a 200,000 rise in nonfarm payrolls, a notable slowdown from January's 517,000 new jobs. A few days later, the U.S. Bureau of Labor Statistics will release the February CPI, with forecasters looking for a year-over-year gain of 5.9%, down from the prior 6.4%.

With those two key data points looming, Powell is in an awkward spot this week. When pressed by Congress, he'll have little choice but to emphasize, once again, the Fed's reliance on incoming data.

In the meantime, today's morning gains couldn't hold. The Nasdaq actually finished slightly lower, while the Dow Jones Industrial Average and the S&P 500 were essentially flat.