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In the animal world of Wall Street, a new showdown is brewing: Hawks vs. Hawks. Bulls.
Federal Reserve Policies repeatedly signaled that interest rates will higher longer So what restrictive policy will inevitably lead to a cooling of the economy. However, hope is born eternal for investors who have chosen to ignore such forecasts and instead focus on the sunny side.
The constant outflow has led to a manic market with sharp reversals in sentiment and data-driven swings. The question is can the Fed break through and convince Wall Street to finally give V market pessimism?
What’s happening: Fed officials expect that lowering inflation to the 2% target would require further increases in interest rates or higher borrowing costs, according to notes from their last policy meeting.
minutes, released on Wednesday, wore a hawkish tone. While members voted unanimously in February to raise rates by a quarter of a percentage point, the notes show that “several members have said they favor a 50 basis point increase in the federal funds rate target range.” [half a percentage point] at this meeting or that they could support raising the target by that amount.”
The statement echoes the recent speeches of the Fed representatives. On Wednesday St. Fed President Luis James Bullard (who has no vote on rates this year) told CNBC he thought “we have a good chance of beating inflation in 2023” without causing a recession, but he argued for faster and more aggressive interest rate hikes.
Last week, Cleveland Fed President Loretta Mester said the central bank needs to raise interest rates above 5% and keep them there. “Leaving aside what financial market participants expected from us, I saw a compelling economic case for a 50 basis point hike,” she said at an event in Florida.
However, the markets are not moving too much. They barely dipped after the release of the minutes and rose again after hours late Wednesday night. Stocks are down slightly this week, but overall, financial markets have rebounded strongly in early 2023.
Shutdown: Interest rates are at a recent high, but stock prices are still high. According to Zachary Hill, head of portfolio management at Horizon Investments, the last time S&P 500 valuations were at this level — in April 2022 — peak rate expectations were just 3.3%, almost 200 basis points lower than today.
According to the Fed’s minutes, policymakers were particularly concerned about this gap.
Fed officials suggested in the minutes of the meeting that this was a reflection of investor confidence that inflation had peaked and that the Fed would soon back out of raising rates, and they feared it could hurt their efforts to restore price stability.
This is because the market recovery is helping to expand the economy, which is contrary to what the Fed is trying to do with its tightening policy.
“A number” of politicians even noted that easing financial conditions could require tougher policies – meaning that if markets don’t give up, they may have to raise rates higher than expected.
But is it just chit-chat, using an overly hawkish tone to crash the markets, or will they practice what they preach?
▸JPMorgan Chase Say no to AI – at least for now. The bank is temporarily restricting the use of ChatGPT among its employees as a noisy AI chatbot explosion of popularity.
The largest US bank has restricted its use to employees around the world, according to a person familiar with the matter. The decision was not made because of any particular issue, but to go along with restrictions on third-party software due to compliance concerns, the source said. JP Morgan ChaseJPM) declined to comment.
UBS estimates that ChatGPT’s monthly active users reached 100 million in January, two months after its launch. According to Swiss bank analysts, this will make it the fastest growing online application in history.
Some businesses encourage employees to use ChatGPT in their daily work. But others worry about the risks. The banking sector, which deals with sensitive customer information and is closely monitored by government regulators, has additional incentives to act cautiously.
▸ Norfolk Southern CEO Alan Shaw promised on Tuesday that the freight railway would spend $6.5 million to help victims of release of pesticides from him derailment almost three weeks ago in East Palestine, Ohio. But earlier this year, the company said it plans to spend more than a thousand times that amount – $7.5 billion – to buy back its own shares for the benefit of its shareholders.
In the meantime, the company has agreed to give one of its unions the paid sick days it demanded for its members in negotiations last year, and is in talks to give sick days to its other unions as well.
This ad came hours after Chief Financial Officer Mark George told investors that Norfolk Southern was still trying to fill open positions in nearly 95 locations. George also said that the company may have laid off too many employees during the in the early days of the pandemic and that the company was having trouble bringing back laid-off employees.
▸ Amazon closes acquisition health care provider One Medical and their parent in $3.9 billion deal on Wednesday, hours after the FTC said it would not contest the purchase, but regulators are still investigating the potential damage to competition and consumers from the deal.
This landmark deal will transform the e-commerce giant into a primary care provider with access to more than 200 inpatient practices and approximately 815,000 One Medical members, according to the company’s latest report. financial report.
The deal with One Medical will also allow Amazon to expand its telemedicine services and establish valuable relationships with hospital systems, industry analysts said.
Amazon said Wednesday that One Medical will offer new customers a $55 discount on an annual membership for a limited time.
main UK supermarkets began rationing sales of some basic fruits and vegetables for salad, blaming bad weather that reduced production in Spain and North Africa.
Tesco (TSKDF), the UK’s largest supermarket, confirmed to CNN on Wednesday that it had temporarily limited the number of packs of tomatoes, peppers and cucumbers to three per customer.
Asda told CNN it’s temporary purchase restrictions some items up to three packs per customer. These include tomatoes, peppers, cucumbers and lettuce. Morrisons told CNN that it has set a two-pack limit per customer for the same products. Aldi said it will impose a limit of three packs of peppers, cucumbers and tomatoes per person in UK stores.
Asda, Morrisons and Aldi are the UK’s third, fourth and fifth largest supermarket chains respectively, according to Kantar’s market share data.
The rationing is another blow to UK buyers who are already struggling with record-breaking products. rising priceswho ignited the worst cost of living crisis in decades.
Food price inflation hit 16.7% in the four weeks to Jan. 22, Kantar said. This is the highest level since the data company started tracking the metric in 2008.
meanwhile, cyber attack According to a company memo about the incident obtained by CNN, earlier this month, manufacturing giant Dole was forced to temporarily close manufacturing facilities in North America and suspend food supplies to grocery stores.
The previously unreported hack, which a source familiar with the incident said was ransomware-related, has led some shoppers to complain on Facebook in recent days that Dole-made salad sets are missing from store shelves.
“Dole Food is in the midst of a cyberattack and has subsequently shut down our systems across North America,” said Emanuel Lazopoulos, senior vice president of Dole’s fresh vegetable division, in a Feb. 10 memo to retailers.
Dole has four processing plants in it United States and employs over 3,000 people, according to a recent company press release.