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Dollar Dips, Netflix, JNJ Earnings, Powell's Trades - What's Moving Markets

EconomyOct 19, 2021 06:39AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- The dollar weakens as poor U.S. industrial production data cast fresh doubt on the strength of the U.S. economic recovery. Allegations of insider trading at the Federal Reserve reach the very top. Stocks are set to open higher as earnings season cranks up: results are due from Johnson & Johnson (NYSE:JNJ), Procter & Gamble (NYSE:PG) and, after the bell, Netflix (NASDAQ:NFLX). Europe's energy crisis eases as the wind starts to blow and some mild weather forecasts cap demand, but the oil market is still as tight as a drum as OPEC struggles to raise output. Here's what you need to know in financial markets on Tuesday, 19th October.

1. Dollar weakens as output data dent inflation narrative

The dollar slumped to a three-week low while U.S. Treasury yields also dipped, after industrial production data showed U.S. factories increasingly struggling with supply chain disruptions in September.

The cheaper dollar encouraged buyers of commodities, which are still thriving at a time of elevated global demand supported by worldwide stimulus policies. Squeezes in industrial metals, accentuated by output curbs on Chinese smelters, extended, with spot premiums for copper, Tin and Nickel widening sharply.

Commodity currencies were the biggest gainers, with the oil-sensitive Russian ruble and the Australian and New Zealand dollars both hitting new highs, as traders moved to price in tightening by the central banks behind them.

 2. Powell trading revelations clout re-nomination outlook

Federal Reserve Chairman Jerome Powell sold between $1 million and $5 million of stocks from his personal portfolio in October last year, only a day before the market fell sharply.

The American Prospect, which first reported the news, framed Powell’s action as a result of the Trump administration’s rejection of his plea for more fiscal stimulus as the economy slowed under a wave of Covid-19 infections. The Fed didn’t comment for TAP’s story but other newswire reports said Powell’s actions were in line with official guidelines on trading.

That’s as maybe, but the allegations come at a bad time for Powell as he battles to win a second term at the head of the central bank, against increasingly stiff resistance from the progressive wing of the Democratic Party, led by Senator Elizabeth Warren.

Powell has just forced out two regional Federal Reserve Presidents, Robert Kaplan and Eric Rosengren, after revelations that they had actively traded the market in 2020.  Vice-Chair Richard Clarida, whose term ends in January, also traded actively on the eve of a Powell speech in October.

3. Stocks / Netflix

U.S. stocks are set to open higher on a day set to be dominated by corporate earnings and central banker speeches.

By 6:15 AM ET (1015 GMT), Dow Jones futures were up 143 points or 0.4%, while S&P 500 futures were up 0.5% and Nasdaq 100 futures were up 0.4%. The market had had an uneven day on Monday, with the Dow falling and the other two indices performing strongly.

Johnson & Johnson, Procter & Gamble, Philip Morris (NYSE:PM) and Travelers (NYSE:TRV) all report earnings before the open, while Netflix tops the bill after the close, with supporting acts from United Airlines and Omnicom.

Housing starts and building permits data for September are the only economic data of note, with the latter expected to fall back after two strong summer months.

4. Winds of change relieve Europe

The wind returned to Europe, taking the edge off wholesale power and gas prices that nonetheless remain well above sustainable levels. Front-month benchmark gas futures in the Netherlands weakened to just over 90 euros a megawatt-hour, down some 40% from last week’s peak. German day-ahead baseload prices fell over 50% to 64.50 EUR/MWh.

Wind generation in the U.K. and Germany, Europe’s two biggest sources of wind power, is expected to hit an all-time high this week, while warmer-than-expected temperatures are set to keep heating demand limited.

Forecasts cited by newswires from The Weather Co suggest that the warm weather is set to last through November, allowing utilities and industrial customers some breathing space as they scramble to meet fuel needs.

5. Oil strong ahead of API data

Crude oil prices, however, regained momentum to test the seven-year highs they hit on Monday, amid lingering worries that OPEC simply isn’t able to increase production as planned.  

Nigeria and Angola both produced below their quota again last month, according to various newswire reports, and Saudi Arabia has not filled the gap, mindful of the bad-tempered fight it had with the United Arab Emirates over market share at last month’s OPEC+ meeting.  

Oil prices are now at a level where production discipline by the major exporters has tended to break down in the past. U.S. crude prices were up 1.3% at $83.28 a barrel, while Brent futures were up 0.9% at $85.12 a barrel. The American Petroleum Institute reports weekly inventory estimates at 4:30 PM as usual.

Dollar Dips, Netflix, JNJ Earnings, Powell's Trades - What's Moving Markets
 

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Comments (15)
Rodney Dangerfield
Rodney Dangerfield Oct 20, 2021 4:14AM ET
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I wonder what the feather pen and gold inkwell stand for that are on the USD $100 bills?
Steffen vdm
Steffen vdm Oct 19, 2021 9:22AM ET
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Next generations will need to pay back all the money that has been, and will be printed. Meanwhile Powell and his friends filling their pockets. Disgraceful!
Kaveh Sun
Kaveh Sun Oct 19, 2021 9:17AM ET
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Powell is a snake
Oei Budi Widarsono
Oei Budi Widarsono Oct 19, 2021 9:17AM ET
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he just know what he doing .you so stupid
Dave Jones
Dave Jones Oct 19, 2021 9:17AM ET
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No. He is right. Not very nice to say someone is stupid who you don't even know.
Raj Somla
rks61 Oct 19, 2021 9:17AM ET
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All snakes...!
Ricardo Diogo
Rcd72 Oct 19, 2021 9:00AM ET
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sleepy Jo 💤💤💤the other one was right
Ricardo Diogo
Rcd72 Oct 19, 2021 8:59AM ET
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now I understand the FED policy!!!we are runned by thiefs
Andy Hsieh
Andy Hsieh Oct 19, 2021 8:29AM ET
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shameless
Larry DeAngelis
Larry DeAngelis Oct 19, 2021 8:27AM ET
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Proof that the casino is fixed! Jail time!!!
Purity mogire
Purity mogire Oct 19, 2021 7:39AM ET
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will Netflix continue running today?
Malik Williams
Malik Williams Oct 19, 2021 7:33AM ET
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Bullish
JAMES CUNHA
JAMES CUNHA Oct 19, 2021 7:31AM ET
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so he wanted additional stimulus which is good for stonks, but triggers inflation. Trump said no knowing that it would trigger additional inflation. Powell sold stocks before the market substantially dropped the next day. No wonder this Fed isn't in a hurry to tighten QE. Why would it? The members of the Fed and the ultra wealthy are personally benefitting from its own policies meanwhile the public gets stuck with higher inflation.
Mohdhataabdrazak Hata
Mohdhataabdrazak Hata Oct 19, 2021 7:27AM ET
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mohdhataabdrazak
JAMES CUNHA
JAMES CUNHA Oct 19, 2021 7:26AM ET
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so basically... if you're part of the Fed insider trading is permitted to avoid loss. however, if you are not it is considered against the law?
Devaraj Krishnamoorthy
Devaraj Krishnamoorthy Oct 19, 2021 7:26AM ET
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Shameful ... he should resign and give up his unfair gains
Empire Destroyer
Empire Destroyer Oct 19, 2021 7:26AM ET
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Not just part of Fed but also part.of Congress... they can't trade but doesn't stop their family and relatives trading
Zinzi Siswana
Zinzi Siswana Oct 19, 2021 7:13AM ET
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Imagine youre 9 to 5 n not trading whereas the guys that are responsible for Your salary and inflation trades heavily in forexThe world has a lot to work on !!
Miriam Morkhul
Miriam Morkhul Oct 19, 2021 7:13AM ET
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That's part of why some convert their fiat dollars into physical gold and silver.
Afzardaud Mpalume
Afzardaud Mpalume Oct 19, 2021 7:08AM ET
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I won but is not in my pocket why
Samsi heria sodikin
Samsi heria sodikin Oct 19, 2021 7:02AM ET
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terimakasih atas informasinya bapak/Ibu pimpinan PT APLIKASI BINOMO.
 
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