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Pre-Markets Mixed Ahead of Next Fed Chair Powell Speech

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Tuesday, February 7th, 2023

Pre-market futures are mixed this morning, looking for opportunities to catch a big higher after two straight down-sessions. We expect the biggest impact on the day’s trading to come during or following Fed Chair Jay Powell’s speech at the Economic Club of Washington mid-day today. The Dow is currently -100 points, but the S&P 500 and Nasdaq are -5 and +10 points, respectively.

Powell’s engagement comes nearly a week after the Fed’s latest interest rate tightening, +25 bps to a current range of 4.50-4.75%. This decision came out a couple days before nonfarm payrolls for the month of January posted a nearly 3x beat over expectations, to +517K new jobs created last month, with an Unemployment Rate sinking to more than a half-century low, 3.4%. Might we expect the Fed Chair to speak a bit more harshly on these conditions, inflationary as they potentially are?

As we mentioned yesterday, this week does not appear to have the same market impact as last week — or next week, with its CPI, PPI and housing numbers throughout — but it does have a couple other events worth mentioning: aside from Fed Chair Powell speaking, Vice Chair Michael Barr also makes an appearance this afternoon. And Consumer Credit for December is expected to come down slightly to $26 billion from $28 billion previously.

This morning, we saw the December International Trade Deficit moderate somewhat, to -$67.4 billion from an expected -$68.5 billion. This follows the November print which was revised from -$61.5 billion to -$61.1 billion this morning. Technically, these are better numbers, but we’re still in a deep hole historically with our trade balance, which comes as a shock to no one.

BP (BP - Free Report) reported Q4 earnings this morning, posting an earnings miss for the first time in eight quarters this morning: $1.59 per American Depositary Share (ADS) versus $1.65 expected, though up notably from the year-ago quarter’s $1.23 per ADS. Revenues, on the other hand, jumped notably to $70.36 billion from $59.51 billion anticipated, and $52.24 billion reported in the year-ago quarter. A +10% share buyback increase to $7.75 billion was also announced. For more on BP’s earnings, click here.

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