So, it's Fed day, and, as I mentioned in our latest video update, Chairman Powell seems to have a knack for pleasing the equity market in his post-announcement pressers. That said, I should clarify, that's been the case pretty much from early 2019 on. Up to that point, his market-friendliness notably paled in comparison to, say, the likes of Ben Bernanke.
Now, with inflation being the serious issue of the day, the question is, which Powell will show up today. The pre-2019 Powell -- who gets credit for a near-bear market when he was talking tough on monetary tightening in Q4 2018 -- or the purring-kitten-Powell we've experienced ever since?
February retail sales were reported this morning, and they came in worse than expected. Revisions, however, for January (up by 1.90%) and December (down by .40%) essentially -- averaged out -- make for as-expected results. H/T Peter Boockvar
Recalling the latest consumer sentiment readings we featured in last week's macro update, weaker retail sales for February should come as no surprise.
The University of Michigan Consumer Sentiment Survey:
An overnight statement from China's top financial committee that essentially bullet-pointed how the government is going to “actively introduce policies that benefit markets” had the country's equity markets literally screaming higher overnight. Which is having a not-small impact on our core emerging markets ETF this morning:
"What are the costs to the economy if we are wrong? If there is no downside risk, you can try any policy you want. If the cost of failure is potentially very large, you should avoid the policy even if the probability of success is better than fifty-fifty, because you cannot accept the cost of failure."
--Greenspan, Alan. The Age of Turbulence: Adventures in a New World
Have a great day!