What we’re reading (1/19)
“Nasdaq Falls More Than 1%, Entering Correction Territory” (Wall Street Journal). “Investors have stepped up bets that the Federal Reserve and other major central banks will tighten monetary policy in the coming months, withdrawing a pillar of support for markets. Mounting expectations of interest-rate rises follow evidence that the drivers of inflation have broadened beyond the supply-chain shock that fueled price gains for much of 2021. That has led to big swings, leaving many stocks in a bear market and stoking giant rotations among different sectors.”
“The Nasdaq Composite Just Logged Its 66th Correction Since 1971—Here’s What History Says Happens Next In The Stock Market” (MarketWatch). “Looking more broadly at the performance of the Nasdaq Composite over the past 65 times it has fallen 10% from a peak, it has finished positive on average, up 0.8%, in the week after, but returns over that first month are weak, until the benchmark breaks through into the three-month period and beyond, where average gains are 2.2%.”
“Wall Street Banks Eye ‘New Normal' For Trading Revenue” (Reuters). “A massive injection of cash into capital markets by the Federal Reserve led to unprecedented liquidity and trading activity through the pandemic as investors sought opportunities to cash in. But trading revenue at leading Wall Street banks fell in the fourth quarter as markets normalized and the Fed scaled back its asset purchases.”
“Congratulations And Commiserations, Derek Flowers” (Dealbreaker). ““Chief risk officer at Wells Fargo” sounds about as poisoned a chalice as exists in any c-suite anywhere. Not quite as unpalatable as, say, chief compliance officer of Credit Suisse (or Wells Fargo, for that matter), but no cup of tea all the same. Now, things aren’t quite as bad as they used to be, someone’s gotta do it, and Derek Flowers has already spent some time mulling over Wells’ precarities as chief credit and market risk officer, so, you know, in for a penny….”
“How Microsoft Bought Activision Blizzard” (DealBook). “In December, with Activision’s stock down sharply, Microsoft reached out to [Activision CEO Bobby] Kotick with a takeover bid. Kotick dismissed the offer, but — eager to steer his beleaguered company to a safe home — told the software giant to come back with a better offer. Microsoft did, beginning a weekslong sprint to hammer out an agreement.”
