- Morning Briefing w/ KevinD
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- Wednesday March 22 @ 9:05am
Wednesday March 22 @ 9:05am
Matthew
March 22, 2023
"Interest rates are to asset prices what gravity is to the apple. When there are low interest rates, there is a very low gravitational pull on asset prices."
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📈 The Markets Overnight
🌏 Asia: Up
🌍 Europe: Up
🌎 US Index Futures: Down slightly
🛢 Crude Oil: Up slightly
💵 Dollar: Down slightly
🧐 Yields: Up
🔮 Crypto: Down slightly
🌏 Major Global Catalysts
Markets anticipating the FOMC commentary accompanying their rate announcement this afternoon.
💵 Economic Reports and Events Today
Consensus forecasts shown
10:30am Crude Oil Inventories -1.7M Change in the number of barrels of crude oil held in inventory by commercial firms during the past week.
2:00pm FOMC Economic Projections and Statement It's the primary tool the Fed uses to communicate their economic and monetary projections to investors and contains the outcome of their vote on interest rates and other policy measures.
2:00pm Federal Funds Rate 5.00% Interest rate at which depository institutions lend balances held at the Federal Reserve to other depository institutions overnight.
2:30pm FOMC Press Conference with Jay Powell The press conference is about an hour long and has 2 parts - first a prepared statement is read, then the conference is open to press questions. The questions often lead to unscripted answers that create heavy market volatility.
📰 Selected Earnings Releases
Consensus Estimates shown
After Hours Today:
KBH KB Home EPS 1.140 Rev 1.31B
CHWY Chewy EPS 0.040 Rev 2.68B
Pre-Market Tomorrow:
GIS General Mills EPS 0.910 Rev 4.94B
DRI Darden Restaurants EPS 2.210 Rev 2.72B
ACN Accenture EPS 2.490 Rev 15.60B
🔮 Selected Analyst Ratings Changes
DKNG DraftKings Susquehanna Maintains Positive Raises to 28.00
ENPH Enphase Energy Susquehanna Upgrades to Positive Targets 275.00
NET Cloudflare Needham Reiterates Buy Maintains 77.00
META Meta Platforms Keybanc Upgrades to Overweight Targets 240.00
NVDA NVIDIA Mizuho Maintains Buy Raises to 290.00
SE Sea Bernstein Maintains Outperform Raises to 100.00
SPOT Spotify Technology Guggenheim Upgrades to Buy Raises to 155.00
📉 Stocks In Play
GME GameStop Up 55% on strong earnings that show the company making a profit.
LAZR Luminar Technologies Down 8% on a Goldman downgrade to sell.
ETNB 89bio Up 30% on positive phase 2 results for its nonalcoholic steatohepatitis treatment.
CVNA Carvana Up 21% on a debt restructuring plan.
💬 Commentary
Yesterday, equity markets displayed remarkable resilience in the face of heightened anticipation surrounding today's FOMC rate statement and Jay Powell's press conference. Energy emerged as the leader, with financials and banks also exhibiting noteworthy performance. The price action in the major indices is technically robust, as they continue to overcome potential resistance levels. Additionally, a considerable number of individual stocks across all sectors have broken out of recent consolidations, indicating potential bullish sentiment. The behavior was somewhat unexpected, given that it occurred the day before a rate announcement.
In the pre-market, index futures are slightly down, and we may expect to see choppy and sideways price action as we approach the FOMC at 2:00. The bond market has priced in a 90% probability of a 25bps rate hike and it is crucial to note that the Fed typically avoids surprising the markets. If, however, there is no hike, the initial reaction may lead to a very temporary market rally but no hike could subsequently trigger a multi-day decline, driven by fear that the banking crisis may be more severe than initially anticipated.
Today, the commentary released with the rate announcement and Jay Powell's statement at the post-release press conference will be of utmost importance to traders. They will scrutinize these closely to ascertain the gravity of the crisis going forward and the future trajectory of interest rates. As we await the outcome of this significant event, we will keep members informed of all the latest developments.
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