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Powell Speech Preview

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What’s in Today’s Report:

  • Powell Speech Preview

Futures are modestly higher as markets bounce back from Thursday’s declines ahead of Powell’s speech.

There were no new developments in Afghanistan overnight as evacuations continued.  The tragedy temporarily hit stocks but it won’t be an ongoing influence on markets.

Expectations for more stimulus from China rose overnight as chatter regarding a Reserve Ration cut grew louder and this, combined with some pre-Powell positioning, are the main reasons futures are higher.

Today the key event is obviously the Powell speech (10:00 a.m. ET) but as a reminder, he won’t announce anything specific regarding tapering (that will come at the Sept 22nd Fed meeting).  Instead, the key will be how much Powell discusses the Delta variant as an economic headwind (the more he mentions it, the more dovish the speech will be taken) and if he reaffirms the Fed is getting close to being able to taper QE (which will mean before year-end).

Outside of Powell, the Core PCE Price Index (E: 0.3% m/m, 3.6% y/y) is the key economic report this morning but as long as it’s much higher than expectations, it won’t move markets.

How is the Market Ignoring the COVID Spike?

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What’s in Today’s Report:

  • How is the Market Ignoring the COVID Spike?
  • Weekly Market Preview:  Is the Recovery Losing Any Momentum?
  • Weekly Economic Cheat Sheet:  Key Growth Data Throughout This Week

Futures are modestly lower following underwhelming Chinese economic data and on a mild decrease in geo-political stability.

Chinese Retail Sales, Industrial Production, and Fixed Asset Investment all rose, but missed expectations and that’s weighing modestly on global stocks.

Geo-politically, the Taliban taking control of Afghanistan doesn’t have any direct market implications, but it is a political negative for Biden which could hurt the chances any infrastructure bill is passed.

Today the only notable economic report is the Empire Manufacturing Index (E: 30.0), and that’s more important than usual as markets will want to see if the Delta variant slowed economic activity in August.  If this number badly misses expectations, it will likely be a headwind on stocks today.