US stocks declined after Fed member Williams did the pushback that everyone was expecting Fed Chair Powell to do. Williams quickly sank risk appetite after he reminded Wall Street that if financial conditions loosen, higher rates may be needed. Financial conditions have been easing since October and this is why the Fed needed to push back on how the markets have been pricing in rate cuts at the end of the year. Williams also reiterated that if the situation changes, they can move faster than 25 basis point moves. Fed’s Cook also restated we are not done raising interest rates.
If the Valentine’s day inflation report ends up being a hot one, traders might start believing the Fed’s hawkish pushback here.
The State of the Union provided a glimpse of what President Biden’s re-election campaign might be. President Biden reiterated that he seeks competition and not conflict with China. He also vowed he won’t let the US default over the debt limit.
When targeting big Oil, he also restated he wants to quadruple the tax on corporate stock buybacks. Biden added that the US will need oil for at least another decade, which might be a bit optimistic as the transition to clean energy appears to be harder than expected. Punishing oil companies won’t happen and this added tax is more just posturing as Americans should prepare for higher prices heading into the summer.
Biden’s SOTU did not provide any surprises and it didn’t alleviate concerns that he is the best candidate for the Democrats to put forward in 2024.
Uber delivered impressive earnings with a 49% jump in revenues to $8.6 billion, better than the analysts’ estimate of $8.5 billion. CEO Khosrowshani said, “We ended 2022 with our strongest quarter ever, with robust demand and record margins.”
Uber’s results and strong active user statistics suggest the consumer is still strong.
Bitcoin’s strong start to the year appears to be over for now. After hitting some key technical resistance just above the $24,000 level, Bitcoin is entering consolidation modes until we see the next big move in bond yields. Bond market volatility will be insane after the Valentine’s day inflation report, which might mean Bitcoin could drift towards the $20,000 level if stocks get hammered over the next few sessions.
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