How’s the market? That’s what many on Wall Street want to know, amid the ongoing war in Eastern Europe, extremely high inflation, belly-churning volatility in stocks and other assets, and a Federal Reserve that is slowly turning the punchbell of Wall Street’s easy money. is ending.
“We are calling the market conditions fragile today,” Greg Basuk, CEO of AXS Investments, an asset-management firm for alternative investments, told MarketWatch in an interview on Friday.
There are many investors who will agree with Basuk, as President Joe Biden is set to deliver what some are referring to as one of the most important such addresses for the country in recent memory, inflation 40. – The year is high and the COVID-19 pandemic is lingering.
“Biden needs to be told that he is ‘doing everything he can to protect the world order’.”
— Thomas Martin
On top of that, colors of Cold War-era tensions are emerging with Russia’s long-apprehensive siege of Ukraine spreading over the weekend and putting major cities at risk.
“This state of the union may be one of the most important ones in recent memory,” said Thomas Martin, senior portfolio manager at Global Investments in Atlanta. Biden needs to be told that he is “doing everything he can to protect the world order,” he said.
The problem is that the world order seems as though it is in flux, shifting of late, under the feet of investors.
Reading: Biden’s new sanctions against Russia: Blocking more banks and cutting tech imports, but no swift moves
And it’s not just Biden on display next week, Federal Reserve Chairman Jerome Powell will testify scheduled to Congress Wednesday and Thursday on monetary policy.
The planned event comes after the S&P 500 SPX put in its biggest intraweek return of +2.24%, up 0.8% after being down 5.4% at the week’s nadir since 2008, as Russian President Putin held a rally in Ukraine. “Special Operations” was announced. The rest of the world calls for an invasion.
Reading: Russia’s credit rating has been scrapped by S&P as other agencies consider it or take downgrade action
According to data compiled by Dow Jones Market Data, the Nasdaq Composite Index comp, +1.64%, was down 7.1% at a week’s low, ending 1.1% for its biggest weekly return since August of 2015. The Dow Jones Industrial Average (DJIA), +2.51%, also made a rally, reducing its weekly losses from a 5% drop to nearly 0.1%.
But it seems the market is hardly out of the woods.
Chris Zacarelli, chief investment officer of the Independent Advisors Coalition, said investors are likely to be fixated on the inflation battle as they look at Biden and Powell’s comments.
“Going forward, markets will find that the Fed’s fight against inflation – in terms of raising interest rates and reducing the size of their balance sheets – is going to be a major threat to investors in the aftermath of the war between Russia and Ukraine. has been,” he said.
Zaccarelli said that the more it seems that “the Fed’s hands are tied, and they are forced to tighten monetary policy to fight inflation, the more volatility we may see.” [markets] during this year. ,
It’s worth noting that Biden’s speech comes as his approval rating is nearly 40% and his disapproval rating is nearing its high, as the average American feels the sting of higher prices on goods and services.
real clear politics
Biden said last week that he would do everything in my power to limit the pain the American people feel at the gas pump. it is important to me.”
“Biden got a tough line to spade,” said GLOBALT’s Martin.
Equally, Powell also has a tough task ahead of him, with many expecting the Fed to begin a series of hikes in benchmark interest rates as soon as next month to tackle inflation. Those rates are currently between 0% and 0.25%.
The concern on Wall Street is that the Federal Reserve could tighten the financial position at the same time inflation highs, and the US economy slips into recession.
It is not clear how the crisis will affect policy decisions in Europe, but it adds another layer of uncertainty to financial markets.
“Going forward, markets will find that the Fed’s fight against inflation – in terms of raising interest rates and reducing the size of their balance sheets – is going to be a major threat to investors in the aftermath of the war between Russia and Ukraine. Used to be.” ,
— Chris Zacarelli
However, there is some indication that supply-chain bottlenecks that were one of the factors contributing to higher prices are beginning to ease.
“We’re starting to see an increase in inventory,” which was pulled forward by corporations in anticipation of a decrease, and that’s a good sign, Martin said. Consumers are coming back and coming back to pre-COVID levels, he said.
And he said that inflation itself becomes the cure for inflation in the form of buyers’ strike.
But can Biden or Powell instill more confidence in the market?
AXS’s Basuk is expecting the president and Powell.
“Because consumers need more confidence to go back to work, start spending again,” he said. “Investors need the possibility that the market will be more stable and this roller coaster will be a light at the end of the table,” he said.
Jobs data and the coming week
And if the next calendar wasn’t already full, the jobs report for February is due on Friday, and the Organization of the Petroleum Exporting Countries (OPEC) meeting on Wednesday is a significant event as US benchmark oil CL.1 Will prove -0.94% touched $100 a barrel last week and natural gas prices NG00, rose -3.37%.
According to a survey of economists polled by The Wall Street Journal, the average job creation this month is estimated at 415,000. The unemployment rate is projected to fall to 3.9% and the average hourly income is projected to rise 0.5% over the month.
Monday
-
Trade in Goods, Advance Report for January, 8:30 a.m. ET
-
Chicago PMI for February at 9:45 am
-
Atlanta Fed President Rafael Bostic speaks at 10:30 a.m.
Tuesday
-
IHS Markit Manufacturing PMI Final for February will be read at 9:45 am
-
ISM Manufacturing Index at 10 am
-
construction cost at 10 am
-
Atlanta’s Bostic speaks again at 2 p.m.
-
Biden’s SOTU is set for the night
Wednesday
-
OPEC+ meeting
-
ADP private sector employment report for February at 8:15 am
-
Chicago Fed President Charles Evans speaks at 9 a.m.
-
St. Louis Fed President James Bullard speaks at 9:30 a.m.
-
Testimony Begins at 10 a.m. at Powell House
-
Beige Book at 2 PM
Thursday
-
Initial jobless claims for the week ending February 26 at 8:30 am
-
Productivity and labor costs for the fourth quarter at 8:30 am
-
IHS Markit services PMI final for February 9:45 am
-
ISM service report and factory orders due at 10am
-
Powell speaks to the Senate at 10 a.m.
-
New York Fed President John Williams speaks at 6 p.m.
Friday
-
Non-farm-payroll report due at 8:30 am
-
Chicago Fed President Charles Evans speaks at 8:45 a.m.
