Powell, Tesla Battery Day and TikTok Snag: 5 Things to Know Today in Markets

Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin update Congress on the state of the economy; global stocks bounce weakly after Monday’s rout, and U.S. markets are set to open mixed; Sterling falls again as the U.K. government abandons its efforts to get people back to the workplace and oil is up ahead of API inventory data: here’s what you need to know in financial markets on Tuesday, September 22nd.

1. Powell, Mnuchin to testify before Congress

U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell begin two days of testimony before Congress on the state of the economy at 8:30 AM ET.

For once, it may be Mnuchin’s comments that get the most attention, since Powell’s stance is already known and was reiterated only last week.

By contrast, Mnuchin’s comments come at a time when faith in a fresh package of economic support measures has all but collapsed: Wall Street analysts were near-unanimous in interpreting the death of Supreme Court Justice Ruth Bader Ginsburg at the weekend as a serious setback, inasmuch as the task of filling her position will inflame tensions between the two major parties and make agreement on other issues, such as fiscal policy, impossible.

2. Elon’s expectation management

Elon Musk engaged in some expectation management ahead of its hotly-awaited Battery Day event, which also coincides with the company’s annual shareholder meeting.

Musk warned via Twitter that the company still faces “significant shortages” of battery cells from 2022 “even with our cell suppliers going at maximum speed…unless we also take action ourselves.”

But he added that the process of scaling up its own manufacturing had problems of its own, meaning that whatever the company announces at the event is unlikely to enter mass production before 2022.

“The extreme difficulty of scaling production of new technology is not well understood,” Musk said via Twitter. “It’s 1000% to 10,000% harder than making a few prototypes. The machine that makes the machine is vastly harder than the machine itself.”

4. U.S. stocks set to open mostly higher

U.S. stocks are set for a mostly higher opening, with tech stocks outperforming again on the expectation that a credible long-term growth narrative will offer the best defense against any new bear market.

By 6:30 AM ET (1030 GMT), the Dow futures contract was down 16 points, or 0.1%, while S&P 500 futures were up 0.2% and the Nasdaq 100 futures contract was up 0.7%.

Global stocks staged a modest rebounded after their worst daily rout in three months. Asian markets, which had avoided Monday’s carnage, were dragged down, but Europe’s which had closed before the end-of-day bounce in the U.S., recouped around one-third of their losses.

The mood continued to be overshadowed by the UK, which effectively abandoned its campaign to get the country back into the office and formally advised people to carry on working from home if possible.

Aside from Tesla (NASDAQ:TSLA), stocks likely to be in focus later include Nike (NYSE:NKE), which reports quarterly earnings after the closing bell, and video games publishers of all stripes, after Microsoft’s $7.5 billion deal for Bethesda Softworks’ parent company illustrated where Satya Nadella expects the growth to be while the pandemic lasts.

4. TikTok Deal Hits Snag

Oracle’s (NYSE:ORCL) and Walmart’s (NYSE:WMT) efforts to secure a stake in TikTok’s U.S. operations look in jeopardy after negative comments from both President Donald Trump and the Chinese Global Times.

“If we find that they don’t have total control, then we are not going to approve the deal,” Trump said on Monday.

That runs contrary to comments from ByteDance, TikTok’s owner, which stressed that it will not only retain an 80% stake in TikTok Global, the U.S.-based subsidiary it intends to create for the video-streaming service, but also that it has no plans to transfer ownership of the algorithms that power it.

5. Oil jittery ahead of API

Crude oil prices recovered the $40 level again but were jittery ahead of the release of U.S. inventory data from the American Petroleum Institute at 4:30 PM ET.

By 6:30 AM, U.S. crude futures were up 1.2% at $40.00 a barrel, while the international benchmark Brent was up 1.3% at $41.98 a barrel.

Oil had tumbled on Monday in a general rout for risk assets, but had largely front-run the weakness in equities two weeks ago. Prices were supported by doubts about the viability of a peace deal that could see Libya return 1 million barrels a day of crude to world markets.