Today markets are back to attention waiting for indications that will come from the Fed. The Dow Jones drops 0.10% to 33,842 points; the Nasdaq is flat with a variation of just + 0.05% at 14,148 points, while the S&P 500 is plastered at 4,224 points.
Federal Reserve number one Jerome Powell will speak in the US House of Representatives. The audition will begin at 20 Italian time.
Last night the Fed released the content of its speech:
“Since the last time we met, the economy has reported sustained improvement – says Powell – Extensive vaccinations have joined unprecedented monetary and fiscal policy interventions, providing strong support for the recovery. The data relating to economic activity and employment continued to strengthen and, this year, real GDP is preparing to mark the fastest growth phase in recent decades ”.
On the issue of inflation, Powell was forced and will be forced again today to admit that it has strengthened.
In this regard, it is recalled that from the dot plot of the FOMC, the monetary policy arm of the Federal Reserve, it now emerges that, on average, the representatives of the institution estimate on average two rate hikes in 2023, when in the March meeting they expected a nothing done at least until 2024.
“Inflation has increased dramatically in recent months,” Powell tells Congress.
At the same time, the Fed chairman will reiterate that most of the price growth is, in his view, the result of a temporary effect and that US inflation should return to 2% over the long term.
Watch out for the GameStop and AMC Entertainment stock memes, after yesterday’s drops, in both cases above -6%.
Stock memes continue to be talked about, in relation to the irrational exuberance of amateur traders.
Attention to the note “The Great 2021 Retail Investor Stock Buying Boom” signed by David Kostin, head strategist of the US equity division of Goldman Sachs, who believes that the great charge of amateur traders started this year with wild trading on these stocks be just at the beginning. He believes net purchases of shares by US households will in fact rise further to $ 400 billion from the previous $ 350 billion this year. Shares, and especially these stock memes loved by amateur traders, therefore have a better chance of being invested by new buys, at least by the retail investor sector.
Kostin calculated that US households are investing an average of 44% of their assets in equities, just below the all-time record of 46% tested on the dot com bubble record (and subsequent explosion).
Focus in the last few hours also on oil prices, after which, for the first time in two years, Brent has touched and exceeded $ 75, the record since 25 April 2019. Oil is about to turn around today, with Brent selling it 0.31% to $ 74.65 per barrel and WTI falling 0.48% to $ 73.31 per barrel.
However, Francisco Blanch, strategist of Bank of America’s commodities research division is bullish and thinks oil prices could be as low as $ 100 in 2022. Goldman Sachs is also bullish on oil prices. The strategists of the American giant are not ruling out that prices will approach the $ 100 a barrel threshold before the end of this year.
“In the short term, our most bullish long belief is Brent crude oil averaging $ 80 a barrel this third quarter, with potential flare-ups above this threshold. Arguably, global demand has risen to 97 million barrels a day in recent days, up from 95 million barrels a day a few weeks ago, as the United States has passed the baton to Europe and emerging markets, where even India is starting to show improvements, ”commented Jeffrey Currie, global head of Goldman Sachs’ commodities research division.
Yesterday Wall Street reported a strong rally: the Dow Jones Industrial Average flew 586.89 points to 33,876.97 points; the S&P 500 rose 1.4% to 4,224.79 points, while the Nasdaq Composite reported a 0.79% rise to 14,141.48 points.