Don’t let the feel-good vibes that kicked off markets in the fourth quarter lead you astray: The Federal Reserve and other central banks could still screw it all up through aggressive monetary policy.
“We are increasingly worried about central banks making a policy error, and of new geopolitical tail risks,” Marko Kolanovic, a top JPMorgan strategist, wrote in a new note to clients. “Given the recent escalation in hawkish rhetoric, the likelihood of central banks committing a policy mistake with negative global consequences has increased, and this started showing in various cracks in FX and rates markets. Even if a mistake is avoided, a delay will likely be introduced for the global market and economic recovery.”
In this March 20, 2019, file photo Federal Reserve Chair Jerome Powell listens to a reporter’s question during a news conference in Washington. (AP Photo/Susan Walsh, File)
The Federal Reserve remains the straw that stirs the drink in global markets as it continues a mission to stomp out inflation by aggressively hiking interest rates, which has set the pace for fellow central banks. That mission was reinforced in the past week by the hawkish commentary from various Fed officials including Fed Chair Jerome Powell and Vice Chair Lael Brainard.
That hawkish tone from the Fed has rippled across an array of asset markets, from the surging U.S. dollar to rising mortgage rates that are nearing 7%.
Despite strong rallies in the first two trading days of October, the Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and Nasdaq Composite (^IXIC) remain mired in double-digit percentage declines for the year. Emerging markets remain under considerable pressure too as investors wait for the next shoe to drop from central bankers.
Rising interest rates have also begun to factor into outlooks from corporate America, notably large multinationals, such as Nike (NKE), that are exposed to currency market volatility.
Other pros on Wall Street are also staying vigilant on the Fed’s interest rate policy.
“The one risk that really worries us is that the Fed has been tightening, inflation really doesn’t come down as they want, and they need to go a lot further than they are saying now [on rates],” Paul Gruenwald, chief economist at S&P Global Ratings chief, warned on Yahoo Finance Live.
That scenario has a low probability, Gruenwald added, but it still presents a risk to markets.
“When that goes into the market and gets repriced, then they’re really going to have to put on the brakes,” the economist said.
Caution: The stock market’s explosive rise in the past two days doesn’t necessarily mean the bear market is over. If anything, the rally suggests that the bear market is alive and well. It’s because daily spikes happen more frequently during bear than bull markets.
(Bloomberg) — Some of Wall Street’s biggest banks aren’t buying this stock-market rally.Most Read from BloombergMusk Revives $44 Billion Twitter Bid, Aiming to Avoid TrialLoretta Lynn, Coal Miner’s Daughter And Country Queen, DiesElon Musk Sets Off Uproar in Ukraine by Tweeting His ‘Peace’ PlanBiden, Kishida Condemn North Korean Missile Launch Over JapanStock Shorts Fold in Best Two-Day Rally Since 2020: Markets WrapFirms from HSBC Holdings Plc to Credit Suisse Group AG are skeptical that the S
You can hold on to Series I bonds for 30 years, but if you jumped in when the interest rate skyrocketed to 9.62%, you might be looking for an off-ramp well before then. The total return on I-bonds is made up of two parts — a fixed rate that’s set at the time of purchase and an inflation-adjusted rate that resets every six months, in November and May. The fixed rate has been 0% since May 2020. Looking at numbers already published, David Enna, founder of TipsWatch.com, a website that tracks inflation-protected securities, predicts the variable inflation-adjusted portion of the I-bonds formula will be around 6.3%, and likely fall to 3.5% eventually.
A record surge in home prices finally seems to be ending. The next phase could be a buyer’s market.
Only about one in four retirees has not experienced any kind of shock event in retirement, according to a study from the Society of Actuaries. “With retired clients, one of the bigger items that we talk about is how many months of distributions we want to set aside for extra money for unforeseen, or irregular expenses,” said Peter T. Palion, certified financial planner and president of Master Plan Advisory in East Norwich, New York. This is one of the most unforeseen expenditures in retirement, and includes the medical needs of a spouse, parent, child or grandchild, says Spencer Betts, a certified financial planner, chief compliance officer and financial consultant at Bickling Financial in Lexington, Massachusetts.
Elon Musk is not a Chief Executive Officer like the others. Tesla’s boss is atypical. The billionaire did not hesitate to relaunch the showdown with the U.S Security and Exchange Commission (SEC) despite a 2018 settlement with the regulator.
(Bloomberg) — Federal Reserve officials are starting to get what they want from the economy, but the bar for any “pivot” toward a less-aggressive monetary policy tightening path is probably still high.Most Read from BloombergMusk Revives $44 Billion Twitter Bid, Aiming to Avoid TrialLoretta Lynn, Coal Miner’s Daughter And Country Queen, DiesElon Musk Sets Off Uproar in Ukraine by Tweeting His ‘Peace’ PlanBiden, Kishida Condemn North Korean Missile Launch Over JapanStock Shorts Fold in Best Two-