In our weekly preview published earlier, we noted that one of the week’s main events – Chair Powell scheduled testimony on Wednesday to the congressional Joint Economic Committee – was expected to be postponed to Thursday because major exchanges will be closed on Wednesday in honor of former U.S. President George H.W. Bush, who died on Friday at the age of 94.
The reason for the heightened interest in what Powell would say is that last week, Powell backed the Fed’s gradual tightening but said its policy rate was “just below” a range of estimates of the so-called neutral level that neither stimulates nor cools growth. In response, stocks shot up and largely recovered November’s earlier losses.
Well, it now appears that while the Wednesday hearing will be canceled, it has yet to be rescheduled, as per the following Bloomberg headlines:
- POWELL HEARING BEFORE CONGRESS ON WEDNESDAY CANCELLED: JEC
- JEC SAYS NO NEW HEARING DATE YET FOR POWELL
Which means that as of this moment, the key events for this week are Friday’s payrolls report, which now that the Fed is suddenly ultra data dependent is once again important, and the OPEC+ summit, where things may be problematic because as Bloomberg noted earlier, Russia is suddenly a major hurdle to material output cuts:
- RUSSIA AND SAUDIS ARE SAID TO DIFFER ON HOW TO SHARE OIL CUTS
- RUSSIA SAID IT WOULD CUT OUPUT BY A MAXIMUM OF 150,000 B/D
Which means that if Saudi Arabia wants higher prices, it will have to shoulder the bulk of production cuts, a move which may infuriate Trump who has been instrumental in shielding MbS from global anger in the aftermath of the Jamal Khashoggi murder.
Meanwhile, Iran – which suddenly feels emboldened after Qatar announced it was going to quit OPEC – warned thatr absent a serious output cut, oil could tumble to $40.
- IRAN OFFICIAL: OIL PRICE WILL DROP TO $40 UNLESS OPEC CUTS
- IRAN OFFICIAL DOUBTS OPEC+ SERIOUS ABOUT CUTTING OUTPUT
And so all eyes are now on the Saudi Crown Prince, who is facing a dilemma: suffer even lower oil prices (by cutting a token amount), or anger the US president and suffer renewed international retribution.
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