Daily Alert – Wednesday 1st December 2021: Powell poops on equities

Mark NugentDaily Alert, Dec 2021

Daily Alert – Wednesday 1st December 2021: Powell poops on equities

Good morning.

So yesterday’s reversal was going quite nicely until Moderna’s CEO soured the mood, as reported yesterday. Later in the day, Jerome Powell, Fed Chair, testified to the Senate Banking Committee and he said that we need to “retire” the word “transitory” when referring to inflation. This changed market expectations around interest rate hikes and their timing and increased expectations of a quicker tapering of pandemic relief funds as Powell has said before that the tapering needs to be completed before the interest rate hiking begins. Equities have benefitted massively from stimulus and its tapering hits them hard.

However, this second leg down in equities just gives us better pricing for the reversal. I am back in Japan225 and WTI long, via pending orders. Both trades are slightly in the money as I write.

Powell is at it again today, this time in the House of Representatives for his testimony before the Financial Services Committee. I suspect he has already made his major impact on the week’s trading.

Later we have ADP Employment Change in the US, which often gives us a heads-up for Friday’s Non-Farm Payroll and as such can move the market.

We’ll be back tomorrow.

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