For a long time, more than a year, the inflation rate flowed smoothly, stocks rising sharply. This raises concerns that something is wrong, leading to pressure on other stock market items.
Earlier this month, Janet Yellen was responsible for slightly snow damage. At a ceremony hosted by Atlantic magazine, the former chairman of the Federal Reserve, now the US Secretary of Treasure, he uttered words that frightened him in the hearts of some market participants: “Perhaps interest rates should rise slightly to ensure that our economy does not go overboard.”
It is funny that this should start with every market. The Fed has reduced prices to zero and opened a dental stimulus in the coronavirus crisis last year. Now, fortunately, the number of vaccines in the US is high and diseases are declining. Business is back to normal, fast. Fast enough, in particular, to set up barriers and bring challenges on everything from wood to work.
It doesn’t take a rocket scientist to see how this can come out. Making predictions is silly, but I’m ready to tie my neck here: next US interest rates will be higher, not downloading.
And yet: bring out the fragrant salt. Following Yellen’s comments, some of the technology that has been in good shape over the past 12 months is gone, and the Nasdaq Composite ended the day by about 2%. Yellen was also enthusiastic about what she said. He was not “predicting or encouraging” the rise, which is no longer in his hands.
Some analysts have described the Treasury secretary’s remarks as part of a misunderstanding. The cold heads felt like a familiar word. The market response simply reflects the attitude of some skin-conscious traders and how investors and investors need to choose their terms.
“Companies seem determined to live a life of luxury,” said Paul Donovan, chief financial officer at UBS Wealth Management. “The rise in consumer prices tells us about the price of oil last year. This is not a concern, but markets want to worry about something. ”
Market moves this week also said the impact was strong. On Tuesday, the stocks went too far fell expecting the reading of inflation on Wednesday to be higher. Wednesday, they dropped again when inflation was shown to be warming.
A recent analysis of US consumer prices has shown 4.2 percent rise in April since last year – the lowest reading since September 2008. Some of the events were even more dramatic; prices for older cars and vehicles jumped 10% in April alone, accounting for the largest share of the profits in the entire index.
Again, however, all of this should not come as a surprise.
“It looks like Wall Street is climbing an anti-anxiety wall,” said Gregory Perdon, a shareholder in state-owned Arbuthnot Latham. “Bears are always on the lookout for signs that the end is near. They come with all possible reasons. The fact is that the only important question is whether the reopening is correct or not. And it is going well. And Europe is pulling. ”
Positive thinking always suggests that the Fed tends to produce unexpected stimuli. It does not want to disrupt the system with the unexpected problems that hinder the economy. As a result, even though the central bank is committed to maintaining a reliable record even in the face of rising prices, some investors have begun preparing the market for a return to normalcy. The days and weeks past indicate that investors will need to learn to have this.
The change is taking place in whiz-bang tech stores, which feel like the right place. This is bad news if you have, for example, Ark Cathie Wood. His professional technical assets are at stake fell more than one-third from the peak in February.
The assets that are closely linked to bitcoin and the recently mentioned companies in the US are also suffering. All of this is what happens as a result of the first-rate market. Permanent economists, a cruel group at the best of times, moved upward in price during the first inflation of the year. In particular, as U.S. yields for the 10-year period rose Wednesday after inflation was released, it did not reach new levels.
Investors in unprofitable companies become less stable after a shocking runoff. For everyone else, except those who believe that inflation is starting to come out, this is the time to fight for a number of nerve tests.