Fed Chair Powell Testimony Again Today

November 14, 2019

STOCK INDEX FUTURES

Stock index futures declined, as Chinese economic data slowed in October and Germany only narrowly avoided a recession in the third quarter.

The number of U.S. workers applying for first-time unemployment benefits increased 14,000 to 225,000 in the week ended November 9. Economists expected 215,000 claims.

The producer price index, which is a measure of the prices businesses receive for their goods and services, increased a seasonally adjusted 0.4% in October from a month earlier. Economists had expected prices to rise 0.3% from September. Excluding the often volatile food and energy categories, producer prices were up 0.3% in October from the prior month when up 0.2% was anticipated.

The main event today will be when Federal Reserve ChairmanJerome Powell returns to Capitol Hill for a second day of testimony about the U.S. economy. His testimony on the economic outlook will be before the House Budget Committee in Washington, DC at 9:00 central time.

Yesterday Mr. Powell said during 90 minutes of testimony that officials believe their current policy stance is likely to remain appropriate, as long as the economy grows moderately and the labor market remains strong.

My view remains that the global reflation scenario is on track and easier credit conditions, although likely at a much slower pace, from most of the worlds central banks are coming and will be the dominant fundamental that supports stock index futures in the long term.

CURRENCY FUTURES

The U.S dollar is stronger, as interest rate differential expectations remain slightly bullish on balance for the greenback.

The euro currency is lower in spite of news that Germany's economy grew in the third quarter. Gross domestic product increased 0.1% from the previous quarter, which was better than economists' expectations of a 0.1% contraction.

The British pound is steady after a report showed U.K. GDP for the third quarter increased 0.2% and employment was up 0.1%.

U.K. retail sales in October fell 0.1%, which compares to the forecast of a 0.2% increase.

INTEREST RATE MARKET FUTURES

Flight to quality buying is coming into the interest rate futures market in light of a less optimistic tone to the U.S.-China trade situation.

Yesterday Federal Reserve Bank of Philadelphia President Patrick Harker repeated his previous comments that he was opposed to the central bank's interest rate cuts this year. At each of the three times the Fed lowered rates, I would have preferred to hold firm.

In addition to Fed Chair Powell earlier today, other Federal Reserve speakers are San Francisco Federal Reserve Bank President Mary Daly at 10:45, New York Federal Reserve Bank President John Williams at 11:00, St. Louis Federal Reserve Bank President James Bullard at 11:20 and Dallas Federal Reserve Bank President Robert Kaplan at 4:00.

There are indications that the global economy is beginning to stabilize, which suggests major central banks are likely to push farther out into the future additional easing measures.

Financial futures markets are suggesting there is a 53% probability that the Federal Reserve will lower its fed funds by 25 basis points at its November 5, 2020 policy meeting.

Yesterday financial futures markets showed the Fed would not be in apposition to lower interest rates again until early 2021.

Interest rate market futures are likely to trade only sideways, although the flight to quality influence is likely to reemerge from time to time, as is the case today.

SUPPORT AND RESISTANCE

December 19S&P 500

Support 3084.00 Resistance 3103.00

December 19 U.S. Dollar Index

Support 98.080 Resistance 98.340

December 19Euro Currency

Support 1.10030 Resistance 1.10430

December 19Japanese Yen

Support .92000 Resistance .92330

December 19Canadian Dollar

Support .75300 Resistance .75550

December 19Australian Dollar

Support .6775 Resistance .6853

December 19 Thirty Year Treasury Bonds

Support 157^2 Resistance 158^24

December 19Gold

Support 1459.0 Resistance 1477.0

December 19Copper

Support 2.6300 Resistance 2.6650

December 19 Crude Oil

Support 57.15 Resistance 58.03

Contact Alan for more extensive information on these markets at 312.242.7911 or via email at alan.bush@admis.com. Thank you.

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