James Bullard, President of the Federal Reserve Bank of St. Louis, at the Jackson Hole Economic Symposium in Moran, Wyoming, USA, Thursday, August 22, 2019.
David Paul Morris | Bloomberg | Bloomberg | Getty Images
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US stocks are frightened by a sustained economic boom and hawkish rhetoric from the Federal Reserve.
What you need to know today
- The US Producer Price Index, which measures inflation at the wholesale level, January rose by 0.7%. It was the biggest gain since June and beat economists’ expectations by 0.3 points.
- Tesla is recalling 362,758 vehicles with experimental driver assistance software. The company warned that the software, known as a full self-driving beta, could cause vehicle crashes.
- Professional Cryptocurrencies are expected to make a comeback in 2023, according to Bernstein analyst Gautam Chugani. Investors may find recent regulatory action in the US less stringent than expected.
Conclusion
Looking at the January numbers, the US economy is running at full capacity. In short, the lowest unemployment rate in 53 years. Personal consumption is recovering despite price hikes. And overnight, we find that the Producer Price Index has risen to its highest level in eight months. means to remain
For a while it seemed as if the market could accept it — and even accept it as the new normal where economic growth can comfortably exist with inflation above 2%. The market rose each time the report exceeded expectations.
Until yesterday. The market finally collapsed. The Dow Jones Industrial Average is down his 1.26%, the S&P 500 is down his 1.38% and the Nasdaq Composite is down his 1.78%. “It should come as no surprise that markets will take a breather in the coming months as hopes for the dovish Fed fade,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley.
In fact, it’s not just that the Federal Reserve pigeons may be flying. Markets widely expected and priced in a 25 basis point rate hike at the Fed’s next two meetings. Yesterday, the forecast was far off.
St. Louis Federal President James Bullard said Thursday that “he supports a 50 basis point rate hike and argued that we should get to a level that the Commission deems sufficiently restrictive as soon as possible.” Stated. Cleveland Fed President Loretta Mester echoed Bullard’s hawkish temperament and said he wanted higher rates. Neither Mester nor Bullard voted on the Federal Open Market Committee this year, but their sentiments may indicate the Fed is more determined to keep inflation in check.
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Correction: This report has been updated to accurately reflect the US trading dates listed. Previous versions used the wrong day of the week.
