The world's two largest economies are on the verge of a nuclear trade war and JP Morgan CEO Jamie Dimon is warning shareholders about the risks of an overheating economy, but Friday afternoon, the investing community will look to Fed Chairman Jerome Powell to reassure them that everything is hunky dory in the US economy.
As we noted earlier, the consensus expectation is that Powell will reiterate the upbeat outlook he shared during the March 21 FOMC meeting. However, since this is a private event, Powell won't be speaking on behalf of the committee - which means the public will get a sense of Powell's thinking about the latest data. A Q&A following Powell's prepared remarks will be closely watched.
Once again, investors will be watching for any clues about whether there will be "three or four" rate hikes this year.
Powell is lucky: With investors still fixated on the ongoing tit-for-tat trade battle between the US and China, it's likely his remarks about the economy will take a back seat, decreasing the likelihood of another "mistake" like when he suggested during his first appearance before Congress as Fed chairman that the central bank was leaving the door open to four interest rate hikes in 2018, triggering a vicious selloff in stocks.
Instead, investors will be looking at the Fed chairman to interpret this morning's jobs report, which showed the US economy added only 103,000 jobs during the month of March - a 3 sigma miss to 185,000 consensus estimate. It was the weakest payrolls month since March 2017. The reason offered for this miss, as previewed by Goldman, was inclement weather, which kept 159,000 Americans from working.
But the market's primary concern - the average hourly earnings number - came in at 0.3% M/M and 2.7% Y/Y - exactly in line with expectations.
However, what is most important is that he offer some crumb of dovishness to reflate stock market indices into the green for the week, because after all, that's his job right?
Powell is due to speak at 130pmET...
The Powell speech highlights, as expected, echo his latest Fed presser, i.e., "the US Economy will require further gradual interest rate hikes, notes 12 month inflation readings should move up notably this spring"
- POWELL SAYS FURTHER GRADUAL RATE HIKES BEST PROMOTE FED GOALS
- POWELL: MODERATE WAGE GAINS SHOW JOB MKT NOT EXCESSIVELY TIGHT
- POWELL: 12-MONTH INFLATION SHOULD MOVE UP `NOTABLY' THIS SPRING
- POWELL: FOMC SEES RISKS TO ECONOMIC OUTLOOK `ROUGHLY BALANCED'
- POWELL: MUST BALANCE BETWEEN HIKING TOO QUICKLY AND TOO SLOWLY
- POWELL: EXPECT INFLATION TO STABILIZE AROUND 2% OVER MEDIUM TERM
- POWELL: PATIENCE APPROACH TO FED RATE HIKES HAS PAID DIVIDENDS
- POWELL: LABOR MARKET HAS BEEN STRONG, EXPECTED TO STAY STRONG
- POWELL: A FEW MEASURES SUGGEST REMAINING LABOR MARKET SLACK
- POWELL SAYS FED BALANCE-SHEET UNWIND GOING SMOOTHLY
His full speech below (speech link):