Powell testifies to Congress, Sky gets a new suitor, and market rally pauses
Fed up
Federal Reserve Chairman Jerome Powell is due to testify before the House Financial Services Committee at 10:00 a.m. Eastern Time this morning, with the text of his testimony due for release at 8:30 a.m.
Powell, in his first appearance in Congress since he took over as Fed
Chair from Janet Yellen, is likely to say that the economy is stronger than expected,
with fiscal stimulus working against attempts to use monetary policy to
tap the brakes. It is unlikely that he will give many hints as to the
pace of rate increases for this year, ahead of the FOMC update to its
economic forecasts next month.
Sky high
Shares in Sky Plc rose as much as 20 percent
in London trading this morning after Comcast made a surprise bid for
the U.K.’s biggest pay-TV company. Comcast’s bid of 12.50 pounds per
share which values Sky at 22.1 billion pounds ($31 billion) is well in
excess of the 10.75 pounds per share offered by Rupert Murdoch’s 21
Century Fox Inc. for the 61 percent stake it doesn’t already own. The
market is pricing a battle for control of the company, with shares
trading at 13.35 pounds at 5:40 a.m., higher than both bids on the table.
Markets flat
Yesterday’s
decisive rally in U.S. stocks, which saw the S&P 500 Index, close
1.2 percent higher hasn’t carried over to global markets. Overnight, the
MSCI Asia Pacific Index was 0.2 percent higher, with Japan’s Topix
Index clocking a 0.9 percent gain, while Hong Kong’s Hang Seng declined
0.7 percent. In Europe, the Stoxx 600 Index was 0.1 percent lower at 5:40 a.m., with media companies the strongest performers in the wake of the Sky offer. S&P 500 futures pointed to a slightly lower open, the 10-year Treasury yield was at 2.871 percent and gold was unchanged.
Goldilocks
Central
banks are facing a new era of problems, according to Ray Dalio, the
billionaire founder of the world’s biggest hedge fund. In an interview
with Bloomberg Television in Beijing, he described the current situation
where there is growth without inflation
as the “goldilocks part of the cycle” with challenges looming as
monetary policy makers struggle to maintain balance between the two.
Dalio is not alone in worrying about the future, with Germany’s
Bundesbank this morning announcing it is increasing the amount of money
it’s putting aside to cover any future losses when the ECB starts to raise interest rates.
Coming up…
It
is not just Powell that markets need to keep an eye on today, with U.S.
durable goods orders, and wholesale inventories data released at 8:30 a.m., and consumer confidence for February due at 10:00 a.m. North of the border, it’s budget day in Canada, and with minimal room to entertain new ambitious spending measures. At 2:00 p.m., the Brookings Institute hosts a conversation between former Fed chairs Janet Yellen and Ben Bernanke.