Wednesday, July 10, 2019
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WHAT TO WATCH
It is gearing up to be a big day for the Federal Reserve. First, Fed Chairman Jerome Powell heads to Capitol Hill to kick off two days of testimony in front of Congress. He will be delivering his semi-annual Monetary Policy Report. Then in the afternoon, the Fed will also release its June meeting minutes. Investors will be paying close attention to these two potential market-moving events.
Powell’s testimony comes on the heels of a blowout June jobs report that was released on Friday. The U.S. labor market continues to remain the bright spot in the economy, even as other recent economic data points to a deceleration. Stocks sank following the jobs report, as investors worried that the stronger-than-expected data would dampen the chances of a rate cut at the Fed’s July meeting. Nevertheless, the markets are still pricing in a 100% chance of a 25 basis point cut in July.
Now, many are wondering what the central bank’s future monetary policy path will look like, and Powell could provide some clues during his testimony. His language about the current state of the economy, as well as risks and “crosscurrents” will play a crucial role. In addition to questions about the economy, Powell will likely be grilled on political pressure, as President Donald Trump continues to relentlessly attack the Fed.
Meanwhile on the corporate earnings side, big-box retailer Bed Bath & Beyond (BBBY) will release quarterly results after the market close.
UK economic growth bounces back despite Brexit uncertainty: UK economic growth bounced back slightly in May, to 0.3%, data released on Wednesday by the Office for National Statistics (ONS) shows. The figure is an improvement on the 0.4% contraction seen in April. [Yahoo Finance UK]
China’s looming deflation fears: The case for Chinese policy makers to ramp up stimulus grew stronger, as tepid domestic demand and falling commodity prices increase the risk of a return to factory deflation. Growth in China’s producer price index slowed to zero in June from a year earlier, the weakest reading in almost three years. Prices fell 0.3% from May. [Bloomberg]
Tesla tells employees it’s preparing to increase production: Tesla Inc. (TSLA) is getting ready to increase electric-vehicle production, according to an internal email, after achieving record deliveries in the second quarter. The company is “making preparations” to raise output at its auto plant in Fremont, California, Tesla’s automotive president, Jerome Guillen, said in an email to employees on Tuesday. [Bloomberg]
Cisco buys Acacia for $2.6 billion: Cisco Systems Inc. (CSCO) agreed to buy Acacia Communications Inc. (ACIA) for about $2.6 billion, the technology giant’s latest acquisition as it seeks technologies to meet customer demand for more robust networks. The San Jose-based company will pay $70 a share, a 46% premium to Acacia’s closing price on Monday, the companies said in a statement Tuesday. [Bloomberg]
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