Powell: Fed is prepared to increase the pace of rate hikes if needed (updated)

The Federal Reserve Chairman Jerome Powell said in the Capitol Hill today that the Fed is prepared to increase pace of the rate hikes if needed.

He reminded that the latest economic data has been stronger than expected. It might be that the ultimate rate peak might be higher than earlier expected.

– Over the past year we have taken forceful actions to tighten the stance of monetary policy. We have raised interest rates by 4 1/2 percentage points over the past year, he said.

After the speech and the early trading the stocks have increased the slide and Nasdaq-index was trading down 0,73%, S&P 500 index down 0,94% and Dow Jones index was trading down 0,87%.

Fed Powell: Positive growth this year in the US

The US Federal Reserve Chairman Jerome Powell said in today’s press conference that the Central Bank estimates positive growth for this year in the US. The Fed decided to raise the rates by 25 basis points to 4,5-4,75% in order to mitigate the high inflation down.

He said that the Fed is still committed to raise the rates while the current economic data is not sufficient to minimise the inflation towards the target of 2 %. Fed will also to continue with its balancesheet reductions related to the pandemic funding.

Mr Powell reminded that some sectors, impacting the core inflation, take more time to balance the situation. The Fed will update its economic projections in its next meeting in March.

Fed minutes: 50 basis points rise is the most likely outcome for December meeting

The Federal Reserve minutes of the Commitee meeting November 1-2 show that the 50 basis points rise is the most likely outcome for the next December meeting.

In November 2, the Fed raised rates by 75 basis points to mitigate the high inflation but after the economic growth speculations, it seems now that the speed of hikes is decreasing slightly.

The meeting participants also reaffirmed the importance of holding themselves and staff accountable for knowing and following the high ethical standards that are in the Commitee’s polices, including those of financial transactions, disclosure and on external communications.

US Powell: Economy softlanding is diminished

The Federal Reserve Chairman Jerome Powell said in the bank’ s press conference on Wednesday that the sotflanding of the US economy is diminished.

The question of recession is becoming more actual when the growth is modest. Powell said that the global Central bankers are having ongoing information sharing but declined the coordinated actions as before. He reminded that each country has their own monetary policy targets.

Powell said that the Fed will continue to monitor the economic and public data and make the rate decisions meeting by meeting. More rate hikes are thus expected for this year as well as the current inflation is clearly above the target range of 2 %. On Wednesday the Fed raised the federal funds again by 75 basis points, for a third time this year.

– We are clearly having restrictive policy now in order to have meaningfull downward pressure on inflation, he stated.

Fed Powell: US is not in a recession

The Chairman of the Federal Reserve Jerome Powell said on Wednesday that the US economy is not in a recession. He was speaking at the press conference after the FOMC meeting.

According to him, the US economy is having a soft landing for example consumer spending is slightly down. The economy is now on the path to mitigate the inflation. Unemployment is at its lowest levels in 14 years. The rate in the US is now 3,6%, Powell said.

The Central Bank is ready to raise rates also in the next meeting in September if the data is showing that kind of trend. Mr Powell reminded that the Fed is acting meeting by meeting based on data.

According to him, the timeline is 8 weeks and the Fed will follow several key metrics affecting inflation.

The Fed is also reducing its Treasury holdings and agency debts in order to balance the balance sheet. Mr Powell expected this will take 2 – 2,5 years time.

Fed raised rates again by 75 basis points

The US Central Bank Federal Reserve raised rates again by 75 basis points in its meeting on Wednesday. In June the rate hike was similar. The Federal funds rate is now 2,25 – 2,50%.

According to Fed’s Chairman Jerome Powell, the Central Bank is ready to increase the rates in its next meeting in September if needed.

He said also in the press conference that the focus of the Fed is to bring the inflation down to the target of 2 % and achieving maximum employment.

Fed Powell: Several shocks have affected markets

The US Federal Reserve Chairman Jerome Powell said that several shocks have affected the markets during the last two, three years. He was speaking in the Fed’s press conference in Washington on Wednesday.

According to him after the pandemic there has been Ukraine war, supply chain bottlenecks and China Covid-lockdown, which have highlighted the meaning of price stability. Mr Powell said that this is the most important target for the Central Bank and the full employment.

He said that the US economy is strong and the labor markets as well. The low unemployment is now 3,6%.

The Fed is also starting to reduce its holdings in Treasuries as part of the balance sheet normalising after the pandemic asset purchases. This will start in the beginning of June. Mr Powell said that the timing is not any statement, but rather business as usual meaning it is a start of the quarter.

Mr Powell also revieled that the interest rates raise by 75 basis points was not the Committee was actively considering. They decided to raise rates by 50 basis points. Wall Street rallied after the decision and the main indexes increased over 2,8%.

Euro was trading at 1,0624 dollars, up 0,02%. European stock markets closed down about one percent on Wednesday trading.

Nasdaq continued down 4 % for the week (updated)

Updated: The Musk’s Tesla stock sales

The stocks ended down in the US, continental Europe and Tokyo, only London and Hong Kong gained for the week.

The Ukraine peace talks did not proceed as the military attacts continued. World leaders continued their efforts to engage with the Ukraine talks.

Latest the US house speaker Nancy Pelosi visited Kyiv to meet the Ukraine President Zelensky to show support.

Dow Jones closed down 2,53 % for the week, S&P 500 index ended down 3,38% and the tech-heavy Nasdaq closed further down 4,09% for the week.

Dow Jones ended at 32.977,21 points, S&P 500 index at 4131,93 points and Nasdaq index at 12.334,64 points. It is worth noticing that Dow Jones index closed down 33. 000 points.

The main topics remained the same related to the Fed actions and rate hikes. The Federal Reserve Chairman Jerome Powell indicated that the half-percentage point rate hike seems likely in the May meeting next week. The Bank of England is to report their new rate decision on Thursday, May 5th.

The inflation in all the major economies, have been on high levels during the winter. For example in the UK 7% and eurozone 7,5%. The US gross domestic production fell 1,4% during the first quarter while it was 6,9% in the fourth quarter.

The takeover bid from Elon Musk, the Tesla founder, proceed as Mr Musk sold Tesla shares worth 4 billion dollars to fund the deal during the week. Totally Musk has sold Tesla shares worth 8,5 billion dollars to fund the deal, Bloomberg reported.

Twitter closed down 0,18%% to 49,02 dollars on Friday. The Musk’s bid was 54,20 dollars per share, valuing the company at 43 billion dollars. Tesla shared closed down 0,77% to 870,76 dollars, below the latest 1000 dollars while ago.

Microsoft and Apple reported growing earnings during last week. Microsoft closed down 4,18% to 277 dollars and Apple down 3,66% to 157 dollars . Amazon reported suddenly a loss of 3,8 billion dollars due to their EV investment in Rivian Automotive.

Amazon is also forecasting slowing growth for the second quarter. This could mean a growth between 3-7 % year on year and would mean a revenue between 116-121 billion dollars. The shares of Amazon closed down 14% to 2485 dollars on Friday.

The Russian Ukraine invasion have increased the commodity prices globally. The Brent crude oil declined to 107,14 dollars per barrel levels on Friday. Gold spot was trading at 1896 dollars.

During last week Russia said it will cut the natural gas supply to Poland and Bulgaria because of the rubles payment dispute. German Finance Minister Christian Lindner said on Saturday that Germany is not paying the Russian gas deliveries with rubles.

In London, the FTSE 100 index closed up 0,39 % to 7544,55 points.

In Frankfurt the Dax index closed down 0,31% for the week and in Paris the CAC 40 index closed down 0,73 %. Dax closed to 14.097,88 points and CAC40 to 6533,77 points.

The French Presidential election showed the leadership of Emmanuel Macron with 58,5 % of the votes during last Sunday. He will continue as the French President for the next five years.

The world largest luxury company French LVMH closed up 0,37% to 619,50 euros in Paris on Friday. Kering followed with 1,42% increase to 513,10 euros.

Kering reported a solid first quarter earnings last week with Gucci revenue up 20% to 2,5 billion euros during the period. In its AGM Kering decided to strenghten its board’s ESG and Climate Change integration with new nominations.

In Asia the Covid situation in Shanghai continued. Hang Seng index closed up 2,14% to 21.089,39 points in Hong Kong and in Japan, the Topix index closed down 0,29% to 1899,62 points for the week.

Wall Street closed down on Monday – Tesla to report on Wednesday

Wall Street closed down on Monday trading after Easter holidays. While the European markets were still closed, Dow Jones ended -0,11 % to 34.411,69 points, S&P 500 index -0,02% to 4391,69 points and Nasdaq index -0,14% to 13.332,36 points.

The earnings season continues and this week for example Tesla, Netflix, Autoliv and SAP will publush their Q1 reports. Tesla will report on Wednesday.

The Fed Chairman Jerome Powell will attend the IMF spring meeting on Thursday with ECB Christine Lagarde in Washington.

The G20 meeting will also take place in Washington this week.

The Ukraine situation remains ulsolved. The World Bank said on Monday that it is planning to target 170 billion dollars as crises response due to the geopolitical tensions. This is more than the World Bank did during the Covid-crises.

Wall Street continued up for the week – Europe mixed

Global stocks ended mixed during last week. At Wall Street all three major indexes ended up for the week. Nasdaq closed up 1,94% for the week, Dow Jones 0,30% and S&P 500 1,76%.

In Europe, London closed up 1,05% for the week, Frankfurt Dax down 0,75 % for the week and Paris CAC 40 down 1,02% for the week.

In Asia, stocks closed up with 3,64% in Japan according to Topix and in Hong Kong down 0,04% according to Hang Seng index.

During last week, the US Federal Reserve Chairman Jerome Powell indicated that there could be a new interest rates hike in their May meeting. He stated that inflation has remained too high.

Tesla opened its first European production site, Gigafactory in Berlin- Brandenburg. According to the CEO Elon Musk it was a remarkable day for the energy transition and future for the company in the European continent. The first Tesla Model Y electric cars were delivered to customers.

In the UK, the February inflation reached 30 years high and was 6,2%. Chancellor Rishi Sunak presented the Spring Statement, which included tax reliefs in personal income taxes and cut in fuel duty. The statement aims also to boost the company innovations in R&D.

The Ukraine crisis continued and the western allies increased their sanctions against Russia. The world leaders continued the global engagement in order to avoid the crisis escalation and establish peace negotiations. Military, humanitarisn and medical aid have been transported to Ukraine. Over 3 million people have fleed Ukraine after the invasion according to the UN.

The commodity prices are still high and there are signs that global food supply may be distrupted while Ukraine and Russia have informed their export limits for the commodities. The western allies increased their efforts to limit the Russian oil and gas deliveries.

During last week the US and the EU agreed to co-operate in energy transition and the US will deliver 15 bcm of LNG to the EU this year. This is part of the green transition and a way to reduce the import of Russian oil and gas to Europe. The Russian Central Bank’s gold reserves were also banned from transactions.

Brent crude oil has come down from the over 130 dollars peak, but it is now trading around 119 dollars per barrel.

For the global economies this crisis has increased the recession possibility. The global growth was first disrupted by the corona pandemic and now this Ukraine war.

During last week a new wave of corona has impacted the Chinese markets and Hong Kong. Also other Asian markets have reported increased cases. Globally there are over 6 million deaths in Covid.

Hong Kong’s leaders Carrie Lam said today on Sunday in the press conference that the city has seen stabilization in the coronacases. She urged still citizens to get vaccinated while it is the only way out of the pandemic as it helps to reduce the infections. The live press conference was delivered by the South China Morning Post.

According to EarthRate ESG Covid weekly report during last month the new Covid-cases have been over 10,9 million in five European countries together (UK, Germany, France, Italy and Spain). Source: EarthRate and Johns Hopkins University).

On Friday major tech and pharma companies closed mixed at WallStreet:

Moderna 165 dollars, down 7,66%, Biontech 161 dollars, down 5,46%, Meta 221 dollars, up 1,02%, Alphabet 2833 dollars, up 0,07%, Apple 174 dollars, up 0,37%, Microsoft 303 dollars, down 0,14%, Tesla 1010 dollars, down 0,32%, Uber 34 dollars, down 1,84%, Lyft 37 dollars, down 3,77% and Pfizer 52 dollars, up 0,36%.

The European luxury sector increased and Burberry closed up 0,72% to 1667 pounds in London, Kering increased 0,89% to 582 euros in Paris and LVMH increased 0,92 % to 628 euros in Paris.

The UK fashion group Ted Baker is in the investors focus as the Synacore Partner Management confirmed on Sunday that they have made a bid of 250 million pounds for the company.