What we’re reading (2/7)
“Bank of America Strategists Warn Fed Hikes In Pricey Market To End Poorly” (Bloomberg). “While U.S. equities saw positive returns during previous periods of rate increases, the key risk this time round is that the Federal Reserve will be ‘tightening into an overvalued market,’ the strategists led by Savita Subramanian wrote in a note. ‘The S&P 500 is more expensive ahead of the first rate hike than any other cycle besides 1999-00,’ they said.”
“Seven Hikes? Fast-Rising Wages Could Cause The Fed To Raise Interest Rates Even Higher This Year” (CNBC). “‘If I’m the Fed, I’m getting more nervous that it’s not just a few outliers’ that are driving wage increases, Ethan Harris, Bank of America’s head of global economics research, said in a media call Monday. ‘If I were the Fed chair ... I would have raised rates early in the fall. When we get this broad-based increase and it starts making its way to wages, you’re behind the curve and you need to start moving.’”
“Expect Markets To Be On A Wild Ride Until The Fed Really Starts Raising Rates” (CNN Business). “The dynamics behind this dilemma have been building for years. Between late 2008 and late 2015, the Fed kept interest rates at or near 0%, while pumping new cash into the banking system on Wall Street. These policies had the desired effect. All those new dollars were forced to find any new investment that would provide a good return (there was, after all, very little incentive to save the money when the Fed was holding interest rates so low). Wall Street speculators chased after a wide variety of assets in search of yield, bidding up prices for things like tech stocks and commercial real estate.”
“Earnings Are Driving The Market But It’s Not Clear Where” (New York Times). “[W]ith the market and the economy in shaky positions, the corporate comments during earnings calls are setting off sharp movements in individual shares and in the overall market. ‘The whiplash, and the extreme movements that we’re seeing, particularly on days when companies report earnings, is less about any extreme thing that is happening with those earnings and more about the background that the market lives in right now,’ said Liz Ann Sonders, chief investment strategist at Charles Schwab.”
“Peter Thiel To Retire From Meta Board Of Directors At 2022 Annual Shareholder Meeting” (Meta Platforms, Inc.). “Meta (NASDAQ: FB) announced today that Peter A. Thiel, Partner at Founders Fund and PayPal co-founder, has decided not to stand for re-election to the Board of Directors of the Company at the Company's 2022 Annual Meeting of Stockholders. Thiel has been a member of the company's board of directors since 2005 and will continue to serve as a director until the date of the Annual Meeting.”
