Morning Reads


Todays Open Interest Change




Central banking is on the radar again as Lael Brainard leaves the No. 2 role at the Federal Reserve to head up the National Economic Council. In her new position, she'll coordinate economic policymaking across the executive branch amid a battle over the debt ceiling, and could possibly entertain an even bigger role in the near future. While she was passed over once to become Fed Chair following high-stakes interviews at the White House, the new move could put her within reach of the top spot - or becoming a future Treasury Secretary - as she builds rapport within the Biden administration's inner circle.

Monetary policy going forward: Brainard was known as one of the most "dovish" members of the Federal Open Market Committee, urging a somewhat less aggressive approach in the fight against inflation. She has advocated for slowing the pace and intensity of rate hikes, providing a counterweight to the spectrum of policy, especially when compared to FOMC "hawks" like Minneapolis Fed President Neel Kashkari and Governor Christopher Waller. While President Biden could nominate a new Fed Vice Chair with a similar stance, it may not be as easy for the appointee to forge policy consensus through persuasion compared to the institutional respect Brainard received by serving on the Fed's board since 2014 (she also chaired four out of the eight subcommittees on the Fed's Board of Governors).

"Lael has brought formidable talent and superb results to everything she has done at the Federal Reserve," Chair Jay Powell said in a statement. "That lengthy list includes her thought leadership on monetary policy and economic research, her stewardship of financial stability and the payments system, strengthening the financial system both domestically and globally, and helping to manage the immense operational agency challenges during the pandemic. My colleagues and I will truly miss her."

Go deeper: Brainard was a big force behind big bank oversight and regulation, and has discussed addressing climate change through the Fed's financial stability mission. In terms of the economy, SA Marketplace author From Growth to Value has pointed to Brainard's views in a recent article about market direction for 2023, referencing her outlook that despite a constrained labor supply, wages do not appear to be driving inflation in a 1970s-style wage-price spiral. Brainard will also not be the only one reshaping Biden's U.S. economic policy, with longtime confidant Jared Bernstein appointed to head the Council of Economic Advisors.

Bumpy disinflation

A mixed inflation report resulted in a mixed day for the market indices. Following the release of the latest Consumer Price Index report, the Dow and S&P 500 finished the choppy session on Tuesday marginally in the red, while the Nasdaq posted a modest advance. It comes as investors debate the direction of the Fed after the upcoming meeting in March and the probability of changes to U.S. monetary policy. On display is a headline CPI figure that inched down to 6.4% Y/Y in January - marking the seventh straight month of easing inflation - though the cooling is moderating, with the CPI rising 0.5% M/M, compared with a previous 0.1% increase in December. (318 comments)

Filing takeaways

It's 13F season, where hedge funds with at least $100M in assets under management reveal their holdings. The flurry of filings gives investors a chance to see what they bought and sold during the quarter, including long positions, and call and put options, though shorts aren't disclosed in the statements. Check out some of the latest headlines on Seeking Alpha to see where the "smart money" is being put to work: Berkshire Hathaway adds to Apple stake, pares US Bancorp, BNY Mellon stakesDruckenmiller's Duquesne adds Nvidia, AMD, exits Amazon, Microsoft and Michael Burry bought Alibaba, SkyWest and MGM in Q4 before he tweeted 'Sell' in Q1. (132 comments)

Reality bites

Morgan Stanley strategist Mike Wilson, who nailed the 2022 bear market calls, says that stocks are "about as disconnected from reality as it's been during this bear market" and that the lows of the market won't come until late spring. But instead of sell-it-all strategy, Wilson screened for stocks "unfairly punished by the market" recently. They include Amazon (AMZN), Southwest (LUV) and Schwab (SCHW). See the rest of the names here. (124 comments)

Today's Markets

In Asia, Japan -0.4%. Hong Kong -1.4%. China -0.4%. India +0.4%.
In Europe, at midday, London +0.1%. Paris +1.3%. Frankfurt +0.6%.
Futures at 6:30, Dow -0.2%. S&P -0.3%. Nasdaq -0.4%. Crude -0.9% to $78.37. Gold -1.1% to $1845. Bitcoin +4% to $22,706.
Ten-year Treasury Yield -1 bps to 3.75%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Retail Sales
8:30 Empire State Mfg Survey
9:15 Industrial Production
10:00 Business Inventories
10:00 NAHB Housing Market Index
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
1:00 PM Results of $15B, 20-Year Bond Auction
4:00 PM Treasury International Capital

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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