Commentary: Paul Ebeling on Wall Street, the Fed’s Fast Actions

Commentary: Paul Ebeling on Wall Street, the Fed’s Fast Actions

$DIA $SPY $QQQ $RUTX $VXX

Last Week’s Close

Friday May options expired, and the market show us that the leaders were going to make good moves. The futures are telling us that Monday trades will be higher after last week’s action.

This story helped: Friday mid-session it was the reported that the Fed purchased $305-M in ETFs and the banking stocks came to life

The Technicals

S&P 500 saw a nice move after 2.5 days lower and will extend into Monday

NAS Comp undercut of the 20-Day EMA and rebounded off of the support. This trajectory is very similar to the prior 2Xs where the NAS Comp tested. the NAS 100 mini is up 97.50 as I write this report.

The Fed’s Fast Action/s

Fed Chairman Powell this week is expected to urge Congress to back more spending for an economy reeling from the impact of the C-19 coronavirus chaos.

He is scheduled to appear via video conference along with Treasury Secretary Steven Mnuchin before the Senate Banking Committee at 10:00a Tuesday. They are testifying on the $2.2-T virus aid/relief package passed by the Congress in March.

He will instill a sense of urgency in the Senate.

Republicans have defended their reluctance to swiftly provide more aid say Chairman Powell has not specified the need is imminent.

Secretary Mnuchin’s Key role will be a cheerleader for the recovery.

The Treasury boss’s job will be to defend The Trump Economy 5 months before President Trump vies for re-election.

So far, Secretary Mnuchin concedes that there will be some “very, very bad Quarters,” he has said that by “next year, we’ll be back to having a great economy just like we had before.

Some Fed watchers, predicted Chairman Powell will focus on the economic data. Despite record federal support already approved by Congress, and a host of emergency Fed lending programs now or soon to be operating, the economy is looking more impaired with each week.

Government data Friday showed US retail sales diving in April, breaking the prior record set just a month earlier, as the virus shuttered businesses and kept Americans at home.

Chairman Powell has been outspoken on the likely need for more fiscal action

The recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems,” he said. “Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”

He said earlier. “This is the time to use the great fiscal power of the US.

Democratic Senators at the hearing are likely to ask Chairman Powell to repeat those remarks.

House Speaker Nancy Pelosi (D-CA) has cast him as supportive of the Democrats’ proposal for a new $3-T relief bill. Friday, the House passed the measure, though it has no future in the Republican-led Senate.

Republicans have dismissed that package as a left-wing wish list stuffed with Pork, aka unnecessary extras unrelated to the current crisis and begun raising alarms over the deficit. President Trump said he’s in “no rush” for a new stimulus.

Chairman Powell worked hard since becoming the Chairman at building strong relationships on Capitol Hill on both sides of the aisle, an effort that could help him avoid being painted as partisan. The Fed’s fast actions at the outset of the crisis have also lent it some new public support that may help.

A Gallup Poll in April, just as the Fed was responding aggressively to the sudden slowdown, showed public confidence in the Fed Chairman was at its highest since Alan Greenspan was there15 yrs ago.

His approval ratings are getting better and better and he will leverage that new standing to be much more forceful.

He is on the record saying the situation is pretty bad and Congress will probably have to do more.

Have a healthy week, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.