Morning Reads

Morning Reads

Open Interest Changes



Easy does it

Get ready for Fed Chair Jerome Powell's semiannual monetary policy testimony before Congress, which is taking on additional importance as investors continue to reassess where rates are headed and the timing of such moves. Powell will answer questions from the Senate Banking Committee today, prior to appearing before the House Financial Services Committee tomorrow. He's expected to reaffirm his commitment to "the incoming data," and will proceed carefully until the economic landscape becomes clearer.

Backdrop: The Fed has paused its aggressive hiking cycle since the last 25 bps increase in June 2023, which interestingly was the last time Powell appeared before Congress. At the time, the Fed's preferred inflation gauge, the core PCE price index, was running at a 4.6% clip on an annual basis. As of last month, the figure had dropped to 2.8%, suggesting that higher interest rates are having their intended effect on combating price pressures.

"I am going to need to see at least another couple more months of inflation data," Christopher Waller, a key member of the Fed's Board of Governors, said in the lead up to Powell's testimony. "The strength of the economy and the recent data we have received on inflation mean it is appropriate to be patient, careful, methodical, deliberative - pick your favorite synonym. Whatever word you pick, they all translate to one idea: What's the rush?"

What else to watch: Lawmakers may still push Powell for a more detailed plan, as well as how higher rates are impacting everything from labor and wages to loans and the housing market. Soft landing talk and other commentary can further excite markets, which are now pricing in a first rate cut for June. Things could also get political, especially during an election year and before President Biden's State of the Union address, and that could reflect accordingly in the various questions from Democratic and GOP committee members.

Bull run

Bitcoin (BTC-USDbriefly surpassed its November 2021 record high on Tuesday as demand for the token continued to be fueled by excitement over spot bitcoin ETFs and the April halving event. The top cryptocurrency rose to $69,200, propelling its market cap to as high as $1.35T, which exceeded the entire U.S. high-yield bond market. However, the momentum was short-lived, likely due to profit-taking, with a sharp reversal seen in volatile trade. In the same session, spot gold (XAUUSD:CUR) climbed to a new record, buoyed by expectations of a June rate cut and a move into safe havens. (118 comments)

Goes the clock

TikTok could be forced to divest from Chinese parent firm ByteDance (BDNCE) within 165 days or face a U.S. ban, as a bipartisan group of lawmakers introduced a bill seeking to address concerns surrounding the popular short video app. The legislation would empower the president to designate social media apps that pose national security risks, which could lead to restrictions unless they sever ties with foreign adversary-controlled entities. The bill still faces an uphill battle. There have been several previous failed attempts at outlawing TikTok, like Montana's state-wide ban that was blocked by a federal judge.

Behind the wheel

Ahead of plans to launch commercial ride-hailing services in Austin, Waymo, Alphabet's (GOOGGOOGL) self-driving unit, will begin robotaxi testing with rides for employees. Note that cities in Texas cannot regulate autonomous vehicles. The announcement comes just days after a California regulator greenlit the company's commercial robotaxi services in Los Angeles, the San Francisco Peninsula, and on San Francisco freeways. Despite its service expansion, Waymo continues to face safety concerns and public ire over its self-driving cars, with a robotaxi set ablaze last month in San Francisco's Chinatown. (2 comments)

Today's Markets

In Asia, Japan flat. Hong Kong +1.7%. China -0.3%. India +0.6%.
In Europe, at midday, London +0.4%. Paris flat. Frankfurt -0.1%.
Futures at 7:00, Dow +0.2%. S&P +0.3%. Nasdaq +0.7%. Crude +1% to $78.94. Gold -0.1% to $2,139.20. Bitcoin +1.3% to $67,511.
Ten-year Treasury Yield +3 bps to 4.16%.

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
10:00 Job Openings and Labor Turnover Survey
10:00 Jerome Powell Speech
10:00 Wholesale Inventories (Preliminary)
10:30 EIA Petroleum Inventories
12:00 PM Fed's Daly Speech
2:00 PM Fed's Beige Book
4:15 PM Fed’s Kashkari Speech

Companies reporting earnings today »

What else is happening...

Google’s (GOOGL) Sergey Brin: Gemini launch was 'messed up.'

Tesla (TSLA) halts production in Germany after suspected arson.

CrowdStrike soars as results top estimates; buys Flow Security.

Target (TGT) gets applause from higher margins and guidance.

Worst day for SoFi Technologies (SOFI) after convertible note offering.

November rematch in store as Biden/Trump dominate Super Tuesday.

iPhone (AAPL) sales in China drop 24% as Huawei popularity grows.

How will the CFPB's late fee credit card rule impact bank earnings?

Soft guidance from Nordstrom (JWN) overshadows upbeat results.

First Solar (FSLR): Tariff exemptions threaten U.S. solar manufacturing.

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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