Daily Rundown: March 7

CHRIS VERSACE: Good morning, members. While it may not be Fed day today, we in the market will be focused on what Fed Chair Powell has to say today as he steps before the Senate Banking Committee. By the time today's Rundown video hits your inbox, Powell should be about halfway done with his two-day appearance on Capitol Hill. And given the volatility that we've come to expect every time Powell takes the podium, it seems, I wanted to remind you of our game plan and how the portfolio is positioned for this type of market.

First, we of course have our inverse ETFs, as well as a sizable amount of cash in the portfolio. But we also have a number of lower beta stocks in the portfolio, as well. If you missed my recent alert talking about beta, companies that have lower ones, like American Waterworks, Verizon, and a few others, what it means is that they have a very low correlation to the market.

In other words, they shouldn't be as volatile as the market is at times like these. Now, we also have a smattering of dividend payers in the portfolio, with, I believe, 17 of the current 30 positions that are paying them. That, too, offers us some stability, as well.

As I said in yesterday's Rundown, there are a couple of areas that we'll want to pay particular attention to while we digest what Powell has to say. Naturally, one will be what he says about the path ahead for monetary policy. And it won't just be for clues about whether the Fed will step up the size of its next rate hike to 50 basis points versus the expected 25 at its March policy meeting. We're also going to want to be listening rather closely about any indication the Fed may have about where it will likely stop raising the Fed funds rate, something that we keep hearing about, something called the terminal level.

Now, I hate to say this, but my bet is that Powell really isn't going to say a whole lot. And my suspicion is that could frustrate the market. I say this because we still have the February employment report out later this week. We have the February CPI and the PPI out next week, as well. Now, ahead of all of that, I think the Fed is going to simply think that, wow, we have a lot of data to chew through, as we do, too. And I suspect it means that Powell will say the Fed means data-dependent as he talks through his comments today and tomorrow.

Now, should that upcoming data show that the pace of job creation and wage inflation are stronger than expected and the unemployment rate remains rather tight, we could see the market's expectation of what's ahead inch further toward the Fed doing more at its March meeting. However, we are going to go through that yet again next week, again with that CPI and PPI data. And as I shared in some notes with you yesterday, it means the market will be trading data point to data point, day to day. Again, that has us sticking on the cautious path, moving opportunistically, if at all, in the coming days.

Now, I want you to be checking your email boxes later today for an alert that will break down what Powell did have to say, what it means for the market and for our portfolio. As a reminder, our next live call is tomorrow. Be sure to tune in at 12:00 PM Eastern time for a full breakdown of the AAP rating system, as well as some of the stocks you've been asking about most. I'm looking forward to it, and I hope to see you there.