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Tackle Today: When Jerome Powell Speaks….

May 12, 2020

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Algos Listen

Bulls continue to be driven by the “Don’t Fight the Fed” storyline. It is easy to understand why this sentiment exists as bears that have fought the Fed over the last decade have had a poor track record. We will save the debate of whether the Fed can emerge victorious in saving the stock market once again for another day. However, one thing that we can all agree on is that one of the strongest arguments (if not THE argument) that the bulls have is a relentless Fed willing to do anything it can to save the economy and hence the markets. 

What if a dent were to be put in the belief that the Fed was willing to do whatever it took? Many market commentators have remarked on the likelihood of negative interest rates and futures markets have priced in negative interest rates for the first time. Fed Chairman Jerome Powell has stated in the past that “We do not see negative policy rates  as likely to be an appropriate policy response here in the United States” however current economic conditions have financial participants pointing to the Fed doing just that.

Jerome Powell speaks on Wednesday morning and many expect him to address the negative interest rate rumors. If he comes out and states that the Fed has no intention of using negative interest rates as a policy tool will the market throw one of its famous temper tantrums? Will the faith that the Fed is willing to do whatever it takes be hit slightly? Will this be interpreted as a “hawkish” stance by the Fed? Whenever Powell speaks it has the chance to be an event but in a week of few economic reports and earnings this certainly stands out on the calendar this week.

Have a wonderful start to your week and if you have any questions email us at [email protected]


Chart of the Day

/ES

Futures are flat at the start of the week. Not terribly surprising after an uneventful news weekend. Will momentum continue this week or will the bulls finally take a week off? 


Video of the day

Dr. Mike  

If you have not had a chance to check out Dr. Mike’s YouTube chanel you might find him an interesting source of information on Covid-19. He is straight forward and very enjoyable to listen to. 


Today’s line up

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