Stock bulls grab the reins, pushing the S&P 500 its 16th record closing high of the year while the Dow and Nasdaq are both just shy of setting their own new record highs.

Investor attention’s yesterday were mostly centered on Federal Reserve Chair Jerome Powell’s second day of Congressional testimony. While Powell did not really provide any new details regarding Fed policy, he did say that the central bank was “not far” from being able to cut interest rates.

Powell’s comments overall were viewed as mostly “dovish” and bulls feel that confidence has been restored on Wall Street that rate cuts will happen as expected.

The outlook now is for the first cut to be made at the Fed’s June 11-12 policy, with a total of three or four -25 basis point cuts by the end of 2024. The next critical tests will be the February Employment Report, set for release this morning, and February CPI (consumer price index) due out next Tuesday.

For the February jobs report today, economists are forecasting a gain of +190,000 jobs versus +353,000 added in January. The unemployment rate is seen holding at 3.7% while hourly earnings are expected to pull back to an annual rate of +4.3% from 4.5% in January.

Along with CPI next week, bulls are looking for confirmation that January’s hotter-than-expected data was a one-off and believe softer reads on both the job market and inflation will allow stocks to continue marching higher.

Bears of course are warning that if the job market and inflation repeat last month’s show of strength, stocks are now poised to fall from even greater heights.

Keep in mind, Powell earlier this week said that the Fed is “not looking for better inflation readings than we’ve had. We’re just looking for more of them.” So even if the slowdown in inflation has stalled, it shouldn’t threaten Wall Street’s Fed policy outlook.

The jobs report today is really the only data of interest.

On the earnings front, results are due from The Buckle. Next week, investors will have more inflation data to digest on Thursday with the Producer Price Index (PPI). Retail Sales and Business Inventories are also out on Thursday, followed by Import/Export Prices, Industrial Production, and Consumer Sentiment on Friday. Key earnings next week include Casey’s General Stores and Oracle on Monday; Kohl’s and On Holding on Tuesday; Dollar Tree, Lennar, and Williams Sonoma on Wednesday; and Adobe, Dick’s Sporting Goods, Dollar General, and Ulta on Thursday. 

Aldi to Add 800 New US Grocery Stores by 2028: The German-owned, Illinois-based chain said in a release Thursday it is planning to build or expand hundreds of Aldi locations in the company's preexisting northeast and midwest strongholds, as well as in western U.S. and Southern California. A first Las Vegas location is planned, too. Meanwhile, in the southeast, the company will convert many existing Winn-Dixies and Harveys locations into Aldis, though "a meaningful" number of them will remain under their current brands. Aldi said Thursday its acquisition of Southeastern Grocers, the parent company of Winn-Dixie and Harveys, had been completed. Source CNBC

White House Trying to Control Influx of Chinese Electric Vehicles:  China's rapidly rising electric vehicle exports are forcing the White House to weigh climate goals against industrial policy and the latter has the upper hand for now. The world's second-largest economy is cranking out lots of affordable EVs, just as the White House increasingly views chargeable cars as a weapon in the fight against global warming. The White House wants EVs at 50% of U.S. sales by 2030, and looming EPA rules could effectively force much higher levels soon after. One friction point is that Biden officials also want clean tech made in the U.S., a big goal of the 2022 Inflation Reduction Act. Their economic pitch touts a green manufacturing surge that provides a bulwark against China. There are also fears of security threats from Chinese tech. Last week the White House, warning of a "flood" of Chinese cars, announced a Commerce Department probe of security risks from "connected" vehicles from there. Chinese-branded EVs aren't for sale in the U.S. and very few have made it here, thanks in part to 27.5% tariffs. But they still could be low-cost enough to compete.  Source Axios

Shippers Divert Cargoes Amid Port Strike Worries: The potential for a strike by the largest union of maritime workers in North America, the International Longshoremen’s Association, is beginning to rise on the list of concerns among logistics decision-makers and advisors in a year already fraught with a multitude of trade uncertainties. Red Sea diversions and Panama Canal drought restrictions are already influencing ocean freight rate negotiations, and the coming deadlines for East Coast and Gulf Coast port labor talks have more shippers on edge. Cargo containers once bound for the East Coast are now beginning to head back to the West Coast to mitigate any service disruptions, a reversal of what occurred in 2022 and 2023. U.S. importers are meeting with ocean carriers this week kicking off their contract negotiations. Between March and April, one-year contracts are inked between U.S. importers and ocean carriers to get their best ocean freight rate. The ILA’s master contract with the United States Maritime Alliance — which represents terminal operators and ocean carriers — is set to expire Sept. 31, but May 17 is the cutoff date set by the union for the local contracts to be agreed to so an overall master contract can then be negotiated. Negotiations for the six-year contract officially began last month. All East Coast and Gulf Coast cargo is moved by the ILA, which hasn’t gone on strike since 1977, when a work stoppage lasted 44 days. Port insiders believe the ILA is targeting an increase larger than the 32% that was negotiated by their West Coast brethren, the ILWU, in its new six-year contract.  Source CNBC

The Great Resignation has Become the Big Stay: The Great Resignation is in the rear-view mirror, and the labor market is showing hints of swinging back in the complete opposite direction. A report from the Bureau of Labor Statistics on Wednesday showed the so-called quits rate — the rate at which workers voluntarily leave their jobs, excluding retirements — fell to 2.1% in January, the lowest since August 2020 on a seasonally adjusted basis. While policymakers have long worried that the labor market had gotten too tight and could fuel inflation, the updated trend in resignations suggests workers are now leaving their jobs less often than was the case before the pandemic disruptions. The shift looks fairly broad based, but it’s notably pronounced in some white-collar industries. The professional and business services supersector (which includes many lawyers, accountants and analysts, among others) has seen a dropoff relative to its 2017-2019 norms. The information industry also stands out as one that’s now seeing even fewer departures than was common before the pandemic (think: reporters, graphic designers, telecommunications workers). Other groups of companies that struggled mightily with excessive departures in 2021 and 2022 (trade and transportation, leisure and hospitality) have essentially seen quitting activity normalize. And a third group is still experiencing excess departures (manufacturing, education and health care.)  Source Bloomberg

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Deadly Ship Attack Means Red Sea Voyages Need Re-Think: A major transport union urged a full halt of merchant ships sailing through the Red Sea, adding to calls for vessels to reconsider the voyages after a Houthi militant attack killed three sailors. “We call on the industry to divert ships around the Cape of Good Hope until safe transit through the Red Sea can be guaranteed,” the International Transport Workers’ Federation said in a statement. “No delivery window is worth the loss of seafarers’ lives.” The ITF lobbies for seafarer rights by acting alongside more than 700 affiliate trade unions. It followed a similar appeal by Nautilus International, one of the world’s largest crewing unions earlier Thursday. Two crew members from the Philippines and another from Vietnam died Wednesday when the Yemen-based Houthis attacked the bulk commodities vessel True Confidence in the Gulf of Aden. At least two other sailors were injured. The incident marks the first deaths of crew members in the militants’ campaign against commercial shipping in one of the world’s busiest waterways. It also raises questions about how much risk shipowners are willing to accept while trying to keep their crews and cargoes safe.  Source Bloomberg

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