03 Mar A RELATIVELY QUIET DAY
Federal Reserve Governor Lael Brainard reiterated yesterday well know known Federal Reserve talking points. She stated it will take “some time” to meet the conditions laid out by the Fed for reducing the pace of its massive asset purchases of government bonds and mortgages amounting monthly to $120 billion. She also signaled that it is Fed’s intent to keep the overnight rate near zero through 2023.
Brainard also remarked that she has a “strong” outlook for 2021, the result of stimulus and rising vaccine rates.
Regarding recent bond market volatility, Brainard stated it “has caught her eye” stating “persistent tightening in financial conditions could slow progress toward the Fed’s goals.”
Treasuries recouped nominal losses on her comments, closing virtually unchanged.
Led by technologies, however, equities traded lower. If one was logical, one would have expected equites—led by technologies—would advance on Brainard’s remarks. The 1.70% decline in the NASDAQ was led by Tesla as the EV traded lower around 4.5%. Bloomberg wrote yesterday “a sudden selloff in the electric car maker could be enough to send stocks spiraling lower,” while discussing yesterday’s and last week’s trading.
The Newswire observed that when the S & P 500 slumped 2.5% on February 25, TSLA fell over 8%, the second biggest decliner in terms of index points after Apple. On the flip side, in Monday’s strong S & P 500 advance, Tesla was the third biggest contributor behind Apple and Microsoft.
The accepted cause for yesterday’s technology selloff was valuations and perhaps the company that may support the greatest valuation as compared to revenues is Tesla.
What will happen today? Will the ISM non-manufacturing Index or the ADP Private Sector Employment Report impact sentiments? Also released is the Beige Book, or the statistical compilation utilized at the upcoming FOMC meeting.
Last night the foreign markets were up. London was up 0.82%, Paris up 0.60% and Frankfurt up 0.90%. China was up 1.95%, Japan up 0.51% and Hang Seng up 2.70%.
Led by energy and financials, the Dow should open nominally higher on the President’s pronouncement that everyone could be vaccinated by the end of May. Oil is up about 2% and the 10 year is off 15/32 to yield 1.45%.