Economy

Cathie Wood Wonders What’s The Next Shoe To Drop, As Ark Invest Founder Blames Fed For Regional Banking, Commercial Real Estate Crises

Published

2 years ago

June 25, 2023

The Federal Reserve hit the pause button at the June meeting and signaled that more rate hikes could be around the corner, but at least one analyst believes that the central bank may have overreacted. What Happened: Ark Invest founder and money manager Cathie Wood took to Twitter on Friday to comment on the Fed’s move.Wood shared a chart of the rate moves since early 1971 to show that the Fed’s current tightening cycle has been more severe than the past cycles, including the one between1980 and 1981 that crushed inflation.”So far, unprecedented Fed tightening has broken the regional banks and commercial real estate. What will deflation destroy next?” she said.While the Fed has noted that inflation has stubbornly remained above its target, Wood has in the past sounded her view that the central bank is relying on lagging indicators. She has argued that the prices of several commodities have dropped significantly from their pandemic highs.See Also: Best Depression StocksWhy It’s Important: Most economists believe a recession is in the cards in the second half of the year, as the economy wilts under the cumulative impact of the Fed’s successive rate hikes.After lowering rates to near-zero levels following the COVID-19 pandemic, the Fed, under the chairmanship of Jerome Powell, began raising interest rates in March 2022. The Fed was panned for not timing its rate hikes right as inflation had begun rearing its ugly head.The Fed hiked rates in all of its meetings before it decided to pause in June. The central bank has cumulatively raised rates by 4.75%-5% in a year’s span and as a result, the fed fund rate currently stands at a 16-year high of 5-5.25%.Powell signaled at his semi-annual monetary policy testimony before Congress this week that the central bank may not be done with its rate hikes yet and remains data-dependent.The banking crisis that led to the collapse of at least three mid-sized banks this year has been blamed for the Fed’s actions. And analysts warn that the crisis may continue. The commercial real estate market is also in the doldrums with occupancy rates remaining low. The Fed rate hikes, along with remote work and the regional banking crisis, have led to the predicament. Economic data released last week, including the jobless claims and the Conference Board’s leading economic index, have signaled a weakening of the economy, which, at one point, held up resiliently amid the rate hikes. The Fed has a fine line to balance as it contemplates its next move at the upcoming July meeting.Related Link: Cathie Wood Sells $7M Tesla Stock Friday Amid Pullback, Bets Big On This Crypto-Linked StockPhoto: Shutterstock

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

1 year ago

December 26, 2023

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.

The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.

Economy

China identifies second set of projects in $140 billion spending plan

Published

1 year ago

December 25, 2023

China identifies second set of projects in $140 billion spending plan

© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo

SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.

With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.

The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.

China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.

The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.

“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.

The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.

($1 = 7.1315 renminbi)

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

1 year ago

December 25, 2023

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.