Powell's Message, and We're Checking on Retail Earnings

* Powell Round 2 - Expect the same message of a healthy economy and eventual rate cuts

* Retail earnings reinforce a selective consumer, we favor Costco and Amazon

* Broadcom, Costco, and Marvell after today's market close

* Mizuho ups its Nvidia price target, what's ahead for Qualcomm's dividend

Powell Round 2 - Expect the same message of eventual rate cuts

US equity markets opened higher Thursday as we get ready for Fed Chair Powell's second day of testimony in Washington. With Powell set to repeat yesterday's opening remarks, we do not expect much new ground, subject to what's covered in the Q&A session. Rather, we expect him to reiterate the message he shared yesterday that the Fed's policy rate is at its "peak for this tightening cycle", and while the central bank is not ready to begin cutting rates immediately, Powell still expects a pivot to interest rate cuts this year. We see that as a gentle nudge, that rate cuts could shift in 3Q 2024 subject to oncoming data, which has been our thinking.

Powell also said the economy looks vibrant and the labor remains tight, which tells us he's been seeing the same data we have. That was reaffirmed in yesterday afternoon's Beige Book release that found economic activity picked up, employment rose at a modest pace, and price pressures persisted. This supports the current market narrative that the economy is growing above trend, which should deliver favorable EPS growth, and rate cuts will eventually happen, a move that could help sustain the economy.

This morning's import/export data from China for January-February of this year showed exports surged 7.1% year over year to $528.01 billion, well ahead of the expected 1.9% gain. This is another signal that global trade is starting to recover, and compared against the rash of global February PMI reports it's another data point for the US being the best house on the economic block. Imports to China also picked up, rising 3.5% year over year for the two months, suggesting improving demand. Given the timing of the Lunar New Year Holidays, we will want to see how sustainable that demand is when the March data is incorporated.

Retail earnings reinforce a selective consumer, we favor Costco and Amazon

However, as we are seeing from companies like Buckle BKE  this morning as well as Victoria's Secret VSCO , United Natural Foods UNFI and Foot Locker FL , the selective customer continues. This afternoon's release of the January Consumer Credit report will give us another view into the consumer and the degree to which they took on additional credit card debt during the post-holiday shopping season will tell us how much firepower they have left. We will continue to favor Action Alerts PLUS names  Costco COST and Amazon AMZN as two of our consumer-facing plays.

Broadcom, Costco, and Marvell report after today's market close

After today's market close, we will have quarterly results from Broadcom AVGO , Costco, and Marvell MRVL . With Broadcom, we will be focused on its AI, data center, and smartphone comments, while at Costco the question will be if management finally announces the long-awaited membership fee price hike.During yesterday's Rundown, we shared why we see Marvell well positioned as the AI boom accelerates, but we also recognize the significant run in the shares means Marvell will need to deliver a pristine earnings report and upside guidance.

Mizuho ups its Nvidia price target, what's ahead for Qualcomm's dividend

Sticking with chips, this morning Mizuho lifted its Nvidia NVDA price target to $1,000 from $850. As we take note of that, we will want to mark March 21 on our calendars for that is when Qualcomm QCOM starts hiking its quarterly dividend to $0.85 per share, a more than 6% increase from its last quarterly dividend. We should see Qualcomm start paying this higher dividend in June.

Action Alerts PLUS is long COST, AMZN, MRVL, NVDA, QCOM.