In today's Action Alerts PLUS Daily Rundown, Chris Versace breaks down what to expect from Federal Reserve Chair Jerome Powell's speech at the Economic Club of Washington D.C. as well as President Biden's State of the Union address Tuesday.
Let's start with the Fed. Chair Jerome Powell will speak at the Washington Economic Club soon after this video hits your inboxes. Following the strong jobs report that came after last week's press conference from Mr. Powell, I'll be closely watching his comments about the economy, given the strength of that jobs report, and the tight labor market as evidenced by the downtick reported in the January unemployment rate.
The big concern about all of this is the tight labor market will continue to stoke the fires of wage inflation. That, and other ongoing inflation pressures Powell discussed during last week's press conference, will lead the Fed to do more than previously anticipated. Now, last week Powell said, quote, "A couple of rate hikes to go." Now, the question is, is it still a couple of rate hikes or something more?
Here's the thing. Before the January employment report, we had several Fed heads come out and say more from the Fed needed to be done. But following that January jobs report, it's hard not to expect even more hawkish comments from Powell compared to what he said last week. And yes, several Fed heads have already laid the groundwork both yesterday and today for that. And yes, we will have even more Fed heads coming at us in the next several days.
The bottom line is the Fed is going to have to do more. It's a question of how much more. Again, we expect Powell to be more hawkish compared to last week. And we'll be watching Treasury yields, the dollar, as well as the stock market to gauge how the market is interpreting Powell's comments. If it gets a little rocky-- and it very well could-- we've got our inverse ETFs still in the portfolio. And if it looks like the market will continue to be volatile, that's actually good news for the portfolios position in SIBO global markets.
Now, Washington is going to remain on our radar as President Biden will take to the podium for his State of the Union address tonight. Yes, we'll be watching his overall comments on the economy, the Russia-Ukraine war, health care, and other Biden agenda items. But we will be focusing really particularly on what is said about defense spending and public safety spending. The reason, of course, is our positions in Lockheed Martin and Axon Enterprises.
With the State of the Union, we, of course, have to contemplate what's being said about the debt ceiling. We know that both Main Street and Wall Street are very focused on this. We'll see what Biden has to say. But unfortunately, I have to be honest here, I see the usual political back and forth playing out. And yes, the clock is ticking.
More than likely, this will come down to the wire just like it has in the past. And I have to be honest again. I'm always surprised by this amount of grandstanding that we see in Washington. But if it gets rocky and takes a little longer than expected, again, down to the wire we could see the market get volatile.
And again, we continue to have our inverse ETF positions in the portfolio, ample cash on hand. And again, any outsized and continued volatility in the market is going to drive the business at SIBO. And that's of course, going to be good for our shares.
On the data front today, we'll also have an eye on today's consumer credit report for December. Our focus is going to be the revolving consumer credit line items and what it says in particular about credit card debt. We expect the holiday shopping seasons, and saw consumers continuing to embrace credit card debt. No real surprise there.
But that also means we are likely to see more post-tax dollars going to debt service than discretionary spending. The why behind that is, well, what have we seen over the last year? The continued tick higher in interest rates, that has led credit card interest rates higher as well.
Now, once we have the report and data in hand, we'll have a much clearer sense as to how big of a headwind this might be for consumer spending as we start the year and for the economy. Thanks for joining us today.