"This cycle is different from other cycles...it has just confounded all sorts of attempts to predict," Powell admitted. There's little doubt that second-guessing recession probabilities over recent months or staying wedded too long fixed assumptions has been less than rewarding. And many think last week's jobs report should similarly be treated with care.
"We believe the data last week does not accurately reflect the U.S. economy. It isn't booming, although it clearly isn't on the verge of recession either," Columbia Threadneedle Investments economist Steven Bell wrote on Wednesday. The upshot is markets are back in wait-and-see mode. Wall St futures have given back a little of Tuesday's surge. Two and 10-year Treasury yields and the dollar edged back lower. The VIX gauge of U.S. stock volatility remains unusually low, below 19 and below its average of the past 30 years.
Elsewhere, investors digested President Joe Biden's State of
the Union speech, in which he challenged Republicans to lift the
U.S. debt ceiling and support tax policies that were friendlier
to middle class Americans.
Biden hammered corporations for profiteering from the
pandemic and ran through a wish list of economic proposals, many
of which are unlikely to be passed by Congress. They included a
minimum tax for billionaires and a quadrupling of the tax on
corporate stock buybacks.
But the U.S. president was especially critical of oil
companies' profits on the back of Ukraine's invasion. "I think
it's outrageous," Biden said.
And the scale of 'Big Oil's' windfall last year was in
evidence around the world yet again on Wednesday.
Norway's Equinor posted a record $74.9 billion
adjusted operating profit for 2022, more than double its
previous high, as gas prices soared - boosting its share price
by 7%. French oil major TotalEnergies posted record
net profits of $36.2 billion, also double the previous year.
In tech, Microsoft Corp said it was revamping its
Bing search engine and Edge Web browser with artificial
intelligence, signaling its ambition to retake the lead in
consumer technology markets where it has fallen behind.
And in global central banking, Fed hawks weren't alone. The
Reserve Bank of India hiked its key repo rate by a quarter
percentage point and surprised markets by leaving the door open
to more tightening, saying core inflation remained high.
Key developments that may provide direction to U.S. markets
later on Wednesday:
* U.S. December wholesale trade sales
* New York Federal Reserve President John Williams, Fed Board
Governor Lisa Cook, Fed Board Governor Christopher Waller, Fed
Vice Chair for Supervision Michael Barr, Atlanta Fed chief
Raphael Bostic, Minneapolis Fed chief Neel Kashkari
* U.S. Treasury auctions 10-year notes
* U.S. corp earnings: Disney, CVS, Fox Corp, Uber, CME,
Brookfield AM, Emerson Electric, Dominion Energy, MGM resorts,
Everest Re, Equifax, Yum! Brands, Eaton Corp, etc
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
US terminal rate Fed alert Equinor adjusted earnings hit record high in 2022 India's monetary tightening continues ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(By Mike Dolan, Editing by Raissa Kasolowsky
mike.dolan@thomsonreuters.com. Twitter: @reutersMikeD)
