(27 FEBRUARY 2019)DAILY MARKET BRIEF 1:Fed boosts equities - mostly

US Federal Reserve Bank Chairman Jerome Powell yesterday told the US Senate’s Banking Committee that the Fed has definitely changed its monetary policy: it will now be “data dependent” and “patient”. Sounding rather like his predecessor Janet Yellen, Powell emphasized that the Fed is unlikely to hike raise interest rate anytime soon and is ready to “adjust” details of its balance sheet run-off. He maintained optimism on the economy, though he acknowledged slowing and warned of risks such as volatile financial markets and uncertainties generated by the trade war. 

This turnaround from the Fed has boosted equities over the last few weeks. Market participants moved back to thinking “bad news is good news”, i.e. bad news on the economy means the Fed will keep flooding market with liquidity). However, investors are not 100% confident the storm is over. Equity markets need their “Fed fix” to keep grinding higher and this is no more guaranteed. On Wednesday, equities are down across the board