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Waiting for Mr. Powell

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Wednesday, March 21, 2018

As geographic Wall Street fights through its fourth Nor’easter since winter began (it’s now spring) and influential Wall Street awaits policy decisions coming down from the Federal Open Market Committee (FOMC) at 2pm ET today, we continue to slog through a dearth of economic indicators this week that will point the way forward for market participants. We’re slow now, but things should be heating up relatively soon.

The timing couldn’t be worse for Facebook (FB - Free Report) , which has come under fire this week for alleged inappropriate deals that may have compromised 50 million Facebook profiles to serve Cambridge Analytica’s successful mission in 2016 to help Donald Trump get elected president. CEO Mark Zuckerberg has been MIA since last weekend’s blistering report came out, and Facebook shares have lost a Tesla’s worth of market cap in just the first 2 trading days of the week. We expect politicians on Capitol Hill to call Zuckerberg, and perhaps Facebook COO Sheryl Sandberg, to testify before Congress about this episode sometime in the near future.

Following today’s FOMC report assessing interest rate policy — the committee will most certainly raise rates another 25 basis points to a range of 1.50-1.75% — the inaugural press conference for new Fed Chair Jerome “Jay” Powell is expected at 2:30pm ET. Yesterday in this column I quickly itemized the big questions investors will no doubt have as the interest rate change is announced.

The only piece of econ data we see ahead of the opening bell today is the Current Account Deficit, which grew 26% in Q4 to 2.6% of U.S. Gross Domestic Product (GDP). This is generally a number we don’t like seeing climbing this high this quickly, but it’s nothing our near-term markets can’t absorb. For instance, back in 2005 we saw a deficit of 6.3% — and that was a high time in both equities and the housing market. We’re not even halfway there again as of the end of 2017, although being mindful of 26% climbs quarter over quarter would probably be prudent.

Mark Vickery
Senior Editor

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