losangelesnewstoday.com May 20, 2018

Fed Chair Powell Delivers Semiannual Congressional Testimony

03 March 2018, 05:03 | Maryann Sutton

NASDAQ 100 daily chart

NASDAQ 100 daily chart

On the economic front, Federal Reserve Chairman Jerome Powell will deliver the semiannual monetary policy testimony before the Senate Banking Committee in Washington at 10.00 am ET.

While many factors shape the economic outlook, some of the headwinds the USA economy faced in previous years have turned into tailwinds: In particular, fiscal policy has become more stimulative and foreign demand for US exports is on a firmer trajectory. He said that monthly job gains averaged 179,000 from July through December, and that payrolls rose an additional 200,000 in January.

Initial U.S. jobless claims (http://www.marketwatch.com/story/us-jobless-claims-fall-to-lowest-level-since-1969-2018-03-01) fell by 10,000 to 210,000 in the seven days ended February 24, the lowest level in almost 50 years.

"Inflation-adjusted gross domestic product (GDP) rose at an annual rate of about 3% in the second half of 2017, 1% faster than its pace in the first half of the year".

Still, Sargen says the market will receive support from solid earnings growth.

Former Fed chief Ben Bernanke famously set off a global bond rout - the "taper tantrum" - in 2013 when he indicated the central bank was about to scale down the bond buying program it began to fight the 2007-2009 financial crisis. Core inflation for February came in at 1.0% from the preliminary 0.9% estimate. Inflation was 1.5 per cent in December, according to the Fed's preferred measurement.

Drop in US oil prices
Follow Fin24 on Twitter , Facebook , Google+ and Pinterest .24.com encourages commentary submitted via MyNews24. Except for the brief hiccup two weeks ago, WTI prices have held above $60 a barrel since the start of 2018.

Powell gave an upbeat view on the United States economy and said data has strengthened his confidence on inflation.

On Tuesday, Powell said lower corporate taxes should lead to higher investment, which should boost productivity and wages. "The surprises, if we are going to see them, are going to be after more data comes out in the next month or two", and accounts for things like the tax cuts and whether business investment spending continues higher, he said. He said that the price situation in Japan was no longer deflationary, although he also warned that hitting the inflation target during the 2019 fiscal year is still unlikely.

Surely, Powell will continue the Yellen's policy of gradual normalization. Excluding transportation-equipment demand, which is volatile, U.S. Durable Goods orders fell 0.3% in January (est. up 0.4%) after rising 0.7% in December. "In addition, in October we initiated a balance sheet normalization program to gradually reduce the Federal Reserve's securities holdings". "In the (FOMC's) view, further gradual rate increases in the federal funds rate will best promote attainment of both of our objectives". "As always, the path of monetary policy will depend on the economic outlook as informed by incoming data".

Mr Powell returns for a second round today with U.S. lawmakers and markets will be looking to see whether he rows back a little from Tuesday's hawkish interpretation of his remarks or whether he reaffirms them.

If you enjoyed the above analysis and would you like to know more about the gold ETFs and their impact on gold price, we invite you to read the April Market Overview report. The stock was the biggest drag on the S&P 500. He observed that this was one percentage point faster than its pace in the first half of the year.

Looking ahead to 2018, the French automaker anticipates a stable automotive market in Europe, and growth of 4 percent in Latin America, 10 percent in Russian Federation and 2 percent in China.

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