– Preet Bharara’s potential last speech to Donald Trump before he got fired. Now that he has been fired by President Trump, “I felt a great disturbance in the force.”
After the shocking news for the sheriff of Wall Street over the weekend, investors will now turn their attention to WWJD March 17 Edition
What Would Janet Do???
The week ahead is highlighted by the Fed statement and the potential to see an interest rate hike. On the economic front, we have Building Permits, CPI, Retail Sales and Michigan Sentiment.
Fed: On Wednesday (3/15), the Fed will release a statement where everybody will be waiting to see if they decide to raise interest rates. Odds for an interest rate hike hit nearly 100% so the markets have already priced it in. If the Fed does raise rates for the first time in 2017, we can expect to see significant volatility following the statement release. Some of the results of an interest rate increase include a strengthening in the US Dollar, a spike in Utilities & Financial companies, a weakening of foreign currencies, oil and metals. We would also see mortgage rates go up as Treasury yields will increase. A press conference will follow the announcement with FOMC Chair Janet Yellen taking questions. If they were to not hike at this meeting, we could see a temporary reversal with the markets pushing higher, and mortgage rates falling back. This could also help to reverse oil’s decline.
Policy Statements: Besides the Fed, we are expecting policy statements from the Bank of Japan, Swiss National Bank and the Bank of England all on Thursday (3/16). Investors are not expecting any massive monetary policy shift. However, any unexpected monetary stimulus announced by either bank has the potential to push markets higher not just in their respective countries, but across markets worldwide. This would likely push the US Dollar higher against the respective currencies.
Oil: West Texas Crude Oil fell down 5% last Wednesday (3/8) on reports that US crude inventories were at record highs. This brought up concerns of a global oil glut as OPEC tries to raise prices by cutting production. Oil continued to slide the rest of the week as WTI fellow below $49, its lowest level since November. The US oil rig count also hit 16 month highs last Friday which helped to push oil down below its 200 day moving average, a technical bearish signal. Investors will continue to monitor the latest oil inventories and rig counts to see if the trend lower continues.
Super Mario Speaks: On Monday (3/13), ECB President Mario Draghi will be speaking in Frankfurt, Germany. After his press conference last week, investors will be listening to any hints as to when the ECB’s monthly Quantitative easing is reduced. The sooner he hints to normalizing monetary policy, we could see bonds in Europe sell off and the Euro increase against a basket of currencies.
Debt Ceiling: Guess who’s back, back again? The Debt Ceiling’s back, tell a friend. Treasury Secretary (Street Fighter) Mnuchin has written a letter to Congress that the US Treasury will reach its borrowing limit on Thursday (3/16). Since the Republicans have the House, Senate and Presidency, it is unlikely that they would use the debt limit as a bargaining chip for legislation before just raising it. Markets are pricing in for them to raise it at the very last minute as to not trigger a default. However, people like myself will be hoping for the US Mint to develop a trillion dollar bill, (which Obama actually did contemplate back in 2011) and for Homer Simpson to put it in a vending machine to buy a snack.
CPI: On Wednesday (3/15), CPI is released. Should CPI come in stronger than expected, it would signal that the consumer will be able to absorb another potential interest rate. If it comes in weaker than expected, it may give the Fed reason to pause before potentially raising rates this week.
St. Patty’s Day: With St. Patty’s Day falling on a Friday this year, investors can expect to see lighter volume and potential higher volatility as traders start their day off with kegs and eggs and march in the St. Patty’s Day parade here in NY. As the day progresses, volume will likely taper off as lunch meetings get swept into St. Patty’s Day debauchery and traders don’t make it back to their desks.
Preet Bharara: The sheriff of Wall Street and the highest profile US Attorney, Preet Bharara was fired by President Trump over the weekend after refusing to resign. This guy took down Sheldon Silver, Joe Bruno and was investigating the NY Governor, NYC Mayor and wall street corruption which will likely see those investigations and others he was working on cease. It’s my opinion that he was likely starting to have a look at President Trump, which his office has the power to do. And because of that, we saw a reversal from Trump’s meeting he had with Preet back after the election which had Trump asking him to stay on past the inauguration. But a rock star like Preet won’t be going away any time soon. Preet will now likely become Obi Wan Kenobi when he last fought Darth Vader. For Preet, “If you fire me now, I shall become more powerful than you can possibly imagine.”