Media: Even hawkish Powell speeches won’t undermine the stock market
The resilient U.S. economy only complicates the mission of the head of the U.S. central bank Jerome Powell to curb inflation, because it implies raising interest rates, according to Business Insider.
So far, the situation is generally favorable: consumer spending is high, the labor market is stable, and the economy continues to grow.
As for the stock market, stocks are holding up surprisingly well amid heightened uncertainty about interest rate dynamics. Usually volatility builds in the market when the outlook for monetary policy is confusing.
All eyes will be on Powell’s speeches today, the head of the U.S. central bank, as he begins his two-day testimony before lawmakers on Capitol Hill. But as Mary Daley, head of the San Francisco Fed, said recently, “The disinflation momentum we need is far from certain. It’s clear that there’s more work to be done.”
So far, Wall Street analysts have cut their earnings estimates for the benchmark S&P 500 index for the year by 3.4 percent, and acknowledge that while the interest rate is higher, there has been no significant deterioration in earnings expectations, as momentum plays a secondary role to the stable earnings outlook for companies.
For example, Tom Lee, head of research at Fundstrat, known for his optimism, bets on more near-term growth potential for stocks, predicting a strong rally in April: “Stocks could rise by 5% because there is a chance that the Fed will still refuse to raise rates.
The latest inflation figure of 6.4%, while still well above the Fed’s 2% target, is not going to prevent stocks from rising, according to Lee.
Earlier we reported that Morgan Stanley predicted an ECB rate hike to 4%.
Startups under threat worldwide after Silicon Valley Bank collapse
High-tech startups have been hit. Companies around the world are facing a fight for survival after the collapse of a major US investment bank, Silicon Valley Bank (SVB). There was a “huge disruption” in the industry globally, Bloomberg reported, citing market participants. The entire stock market, and the S&P 500 in particular, plummeted.
Startups under threat
The bankruptcy of the lending institution, in particular, affected the co-founder of startup Birdly Inc. Quang Hoang. The entrepreneur invested about $10 million in SVB and is still unable to repay the money four days after the bank was shut down by the California Department of Financial Protection and Innovation. However, the entrepreneur is far from the only one who has faced similar problems, the article specifies.
“Hoang was one of thousands of founders around the world this week trying to track down their money after days of chaos and who are completely rethinking the way they run their own businesses. Startups from Silicon Valley to London to Tel Aviv to tech hubs across Africa have depended on SVB as a one-stop store for everything from storing their fortunes to personal mortgages,” the story says.
Now investors and technology companies are predicting a complicated financial future for themselves, even if the bankrupt bank begins to attract deposits from customers under a new name. Many market participants faced a “financial payback” for their overreliance on the credit institution’s risky investment assets, the memo said.
On March 11, the California Department of Financial Protection and Innovation closed Silicon Valley Bank, a large investment bank based in Santa Clara County. All insured deposits from SVB were transferred to Deposit Insurance National Bank of Santa Clara. Depositors were expected to have access to their accounts by March 13.
Earlier we reported that the U.S. Department of Justice has begun an investigation into the circumstances of the collapse of Silicon Valley Bank.
U.S. Justice Department Opens Investigation into Silicon Valley Bank Collapse
The U.S. Justice Department is set to investigate the circumstances surrounding the bankruptcy of Silicon Valley Bank (SVB), which was the largest since the global crisis in 2008. The entire stock market collapsed, in particular the S&P 500. This was reported by The New York Times (NYT), citing two people familiar with the situation.
The sources of the newspaper noted that the investigation is at a very early stage, and it is not yet very clear what the focus of federal investigators and prosecutors will be.
Lawyers believe that the main point that may attract investigators is that a few weeks before the crash of SVB, several top managers sold their shares. The sale of securities brought the sellers millions of dollars.
Market experts pointed out that some top managers sold their shares by previously announced plans, so that such sales would not seem illegal. For this purpose, the date of sale of securities and their volume are chosen in advance. However, some politicians have already said that all of the bank’s top managers should return the money received from the sale of shares.
Earlier on Wednesday, the Wall Street Journal, citing its sources, wrote that creditors of the bankrupt bank SVB joined to make profits after the collapse of the financial institution.
Earlier, we reported that an American billionaire declared the collapse of American capitalism.
U.S. Billionaire Says ‘Collapse of American Capitalism’
Is the collapse of the U.S. economy coming? The Silicon Valley Bank (SVB) bailout package released by American regulators shows that American capitalism is “crumbling before our eyes”. Ken Griffin, founder of the hedge fund Citadel, told The Financial Times.
“There has been a loss of financial discipline because the government bailed out depositors completely. It would have been a great lesson in moral hazard. The loss to depositors would have been insignificant, and it would have increased the importance of risk management,” he said.
In Griffin’s view, the U.S. government should not have taken such drastic action. Griffin’s position contrasts with that of another senior hedge fund manager, Bill Eckman, who on March 13 urged the Federal Deposit Insurance Corporation to “clearly guarantee all deposits now,” warning that “hours matter.”
Eckman wrote on Twitter that “our economy will not function effectively without our community and regional banking system.”
The situation is already affecting the Euro / U.S. Dollar exchange rate.
We previously reported that The Fed announced an emergency bailout of the U.S. banking sector.
Forex8 months ago
Forex Today: the dollar is gaining strength amid gloomy sentiment at the start of the Fed’s week
Forex4 months ago
Unbiased review of Pocket Option broker
World5 months ago
Why are modern video games an art form?
Forex8 months ago
How is the Australian dollar doing today?
Cryptocurrency8 months ago
What happened in the crypto market – current events today
Stock Markets8 months ago
Morgan Stanley: bear market rally to continue
Stock Markets3 months ago
Amazon layoffs news: company announces record layoffs
Forex7 months ago
Dollar to pound sterling exchange rate today: Pound plummeted to its lowest since 1985