What we’re reading (3/21)
“The Stock Market Liked The Fed’s Plan To Raise Interest Rates. It’s Wrong.” (Larry Summers). “The central principle of anti-inflationary monetary policy is that to reduce inflation it is necessary to raise real rates. Equivalently, it is necessary to raise interest rates by more than the inflation being counteracted and above a neutral level that neither speeds nor slows growth….[y]et because of upward revisions in the inflation forecast, the Fed’s predicted real rates have actually declined in recent months. In other words, the FOMC’s plans do not even call for keeping up with the rising inflationary gap. It is hard to see how interest rates that even three years from now will be about 2 percentage points less than current rates of inflation can reasonably be regarded as providing sufficient restraint.”
“Powell Says Fed Will Consider More-Aggressive Interest-Rate Increases To Reduce Inflation” (Wall Street Journal). “Federal Reserve Chairman Jerome Powell said the central bank was prepared to raise interest rates in half-percentage-point steps and high enough to deliberately slow the economy if it concluded such steps were warranted to bring down inflation.”
“Bonds Extend Drop After Fed Sparks One Of Worst Days in Decade” (Bloomberg). “The U.S. bond market reeled further on Tuesday, extending Monday’s declines after Federal Reserve Chair Jerome Powell’s aggressive rate hike comments drove yields on short-dated Treasuries to one of their biggest daily jumps of the past decade.
“JPMorgan’s Quant Guru Says He's Still Bullish On Stocks But Admits Risks Are Building And Lowers S&P 500 Price Target” (Insider). “‘With positioning light, sentiment weak and geopolitical risks likely to ease over time, we believe risks are skewed to the upside...That said, we revised down some year-end targets to reflect macro and geopolitical risks, which should ease into the second half of the year,’ [Marko] Kolanovic said.”
“Want to Outperform In VC? Don’t Invest In Alumni.” (Institutional Investor). “New research shows that direct investments in university-affiliated startups can result in far fewer successful exits, including initial public offerings and acquisitions, compared to backing independent ventures.”
