What to know in the week ahead

Investors this week will look ahead to a packed calendar of events, including multiple days of congressional testimony for Federal Reserve Chair Jerome Powell, Tesla’s inaugural battery technology event, and a handful of closely watched corporate earnings results and economic data releases.

Powell heads to Capitol Hill

Just following the Federal Open Market Committee’s (FOMC) September monetary policy meeting, Fed Chair Powell is set to appear before Congress in three separate hearings, alongside Treasury Secretary Steven Mnuchin.

First, Powell and Mnuchin will on Tuesday appear before the House Financial Services Committee to discuss oversight of the Treasury Department’s and Federal Reserve’s pandemic response. They will then appear before the Select Subcommittee on the Coronavirus Crisis on Wednesday, followed by the Senate Committee on Banking, Housing, and Urban Affairs on Thursday.

Questions around the need for fiscal support amid the ongoing coronavirus pandemic will likely be directed to both Powell and Mnuchin. Powell has continuously contended that both fiscal and monetary policy would be needed to ensure a robust economy recovery, while acknowledging that the contents of any further fiscal coronavirus relief legislation fall under Congress’s purview.

“The Fed cannot grant money to particular beneficiaries. We can only create programs or facilities with broad-based eligibility to make loans to solvent entities with the expectation that the loans will be repaid,” Fed Chair Powell said in prepared remarks Wednesday during a press conference. “Direct fiscal support may be needed … The current economic downturn is the most severe in our lifetimes. It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year, and it may take continued support from both monetary and fiscal policy to achieve that.”

On how and when that support might arrive, Powell added later during Wednesday’s question and answer session, “There is an expectation among private forecasters and among FOMC participants that there will be some further fiscal action. And there does seem to be an appetite on the part of all the relevant players to doing something.”

Story continues

“The question is how much and when,” he added. “No one has any certainty around that. But broadly speaking, if we don’t get that, then there would certainly be downside risks.”

In Congress, lawmakers have been locked in a more than month-long stalemate over passage of another round of virus relief-related fiscal stimulus.

Earlier this month, Senate Democrats blocked a $300 billion Covid-19 relief bill – a so-called “skinny” bill that they argued did not contain adequate support to address the ongoing coronavirus crisis. Democratic lawmakers have pushed for an about $3 trillion deal, though Republican lawmakers have balked at the size of such a deal. Many viewed the Senate’s failure to advance the slimmed-down relief package as the last chance before the presidential election for congressional lawmakers to move a relief bill toward passage.

On monetary policy, the first of this week’s testimonies comes less than a week after the FOMC released its September monetary policy decision, wherein officials unveiled for the first time more details on their outcome-based forward guidance for interest rates, and more specifically, the conditions under which a liftoff from their current near-zero may be warranted. Fed Chair Powell is likely to be questioned on the implementation of this guidance, with the Fed suggesting it would keep rates close to zero “until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.”

Tesla Battery Day

On Tuesday, Tesla (TSLA) will host its highly anticipated, inaugural company event focused on unveiling new battery technology.

CEO Elon Musk has teased the event in recent Twitter posts, saying on Sept. 11 that “many exciting things” will be revealed for the first time at the event.

Questions around battery efficiency, costs, sizing, durability and range will likely take center stage, as…