Heading for record territory

We’re trading in the green again on Friday, with US futures pointing to fresh record highs on Wall Street after a satisfying testimony from Jerome Powell earlier in the week.

Powell testified on the semi-annual monetary policy report and Wednesday and Thursday and, safe to say, he passed with flying colors as far as investors are concerned.

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His downbeat tone when reflecting on the economic outlook and inflation combined with his complete lack of desire to correct market expectations, despite a cut being 100% priced in this month, gave investors exactly what they wanted.

Trade talks are continuing between the US and China although Trump’s tweet about Chinese purchases of agricultural products yesterday further highlighted how more speed bumps may remain in the road ahead.

The G20 was a positive development but there’s still a long way to go and while a deal makes sense for both sides this year, it’s far from guaranteed and could hit many more snags.

Still, with talks ongoing and the Fed soon to be back in easing mode, attention can now shift to earnings season which gets underway next week. It’s expected to be a tough season for companies with a large number have offered negative guidance in the run up to it.

An earnings recession looks on the cards, with earnings expected to have declined by a little below 3% in the second quarter, further fueling the case for rate cuts.

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