Fed Chair Jerome Powell could shake up the markets once again this afternoon. He is set to give the opening remarks for a Fed Listens event in Washington D.C. @ 2:00pm ET. Given the fireworks his press conference generated on Wednesday, there is potential for more this afternoon.
The Securities and Exchange Commission (SEC) has decided that zero-commission brokerages are not ripping their customers off and will allow brokerages to continue being paid for order flow (PFOF) from market makers like Citadel Securities or Virtu Americas. Rather than an all-out PFOF ban, the SEC thinks more price transparency and requiring brokers to execute at the best possible price at the time will reduce the problem of small investors paying too much and allow commission-free brokerages like Robinhood to exist. One study showed that the differences in prices between fee brokerages and commission-free brokerages cost investors up to $34 billion per year.
Stocks are down overnight with some global markets hitting 2-year lows as global central banks crank up the rate hikes. German PMIs showed a deep contraction in manufacturing.
In the US, the Atlanta Fed’s GDPNow tool is forecasting third quarter growth of 0.3% and the bond market continues to give recession warnings with the 2-year rising to 4.19%. Meanwhile, Goldman Sachs cut their full year target for the S&P 500 to 3600.
Speaking of big banks, they got Congressional pressure on Thursday to raise savings interest rates. While Fed rates have increased significantly, big bank savings interest rates have not moved from 0.01%. The banks are posting 10s of billions in quarterly profits, around 25% of gross revenue, catching the ire of lawmakers. Many regional banks now paying 2% or more on savings accounts.
Costco (COST) is down over 3% premarket after beating earnings but warning of narrowing profit margins.
Corporate earnings include Carnival (CCL).
The economic calendar focus is the Flash PMIs @ 9:45am ET.
Volatility remains high.
Whale bias is short into the US session open on decent large trader volume.