We’re again seeing mixed market activity this morning in the pre-market, with the Dow looking to open down 120 points and the S&P -10 points as of a half-hour prior to the bell. The Nasdaq now appears to open 25 points into the green on the one-year “anniversary” of its bottoming-out in the pandemic-led bear market. Since then, the Nasdaq has grown a solid 100%, but is still around 5% off its all-time highs set about six weeks ago.
On the docket today will be public testimony on Capitol Hill by Fed Chair Jay Powell and former Fed Chair/current Treasury Secretary Janet Yellen in front of the House Committee on Federal Services. Both will likely be answering plenty of questions relating to the steady build of inflation metrics in addition to an historic stimulus package hitting the economy currently. No one expects seismic shifts in either authority’s testimony, but their language will be finely parsed.
New Home Sales for February will also be released after today’s open, with 879K new sales expected from last month. Existing Home Sales, released yesterday, came in somewhat shy of both expectations and the previous month’s totals, on supply demands that show current homeowners resistant to putting their homes up for sale at the present time. New Home Sales also has a problem on the supply side, with lumber supplies and other materials at very high prices historically.
Before today’s open, we see a new read on the Current Account Deficit for Q4, with the headline slightly worse than expected: -$188.5 billion versus -$187 billion analysts were looking for. The Q3 number was revised lower as well, to -$180.9 billion versus the -$179 billion originally reported. This represents a new cycle low, but off the all-time deficit around -$219 billion at the peak of the U.S. housing bubble in the mid-to-late 2000s.
Deficits had been filled in somewhat upon the Great Recession backstopping of financial institutions, and held somewhat steady until the last few years, when we started seeing a new downward trajectory. But the deficit really fell off the table around the start of 2020 — pre-pandemic but still in the midst of the U.S.-China trade war. For February 2021, the deficit on Goods has expanded, while the surplus on Services has contracted somewhat.