US markets closed mixed Wednesday even after the Federal Reserve promised to keep in place its emergency policy stance.
Earlier, the Fed signaled it will keep interest rates near zero at least through 2023. The US central bank also said it will keep buying bonds at the current pace until “substantial further progress” is made in meeting its employment and inflation goals.
Meanwhile, Congressional leaders appeared to make more progress on a badly needed relief package designed to blunt the pandemic’s economic impact.
Jerome Powell isn’t sure how many more ways he can say it: Inflation just isn’t a problem right now.
Sure, rates are near zero and are expected to stay there for years. But the Fed has been saying for a year that it doesn’t expect inflation to pick up to its target 2% range for quite some time. That’s neither a problem nor a benefit, Powell said.
Powell noted that inflation has been largely absent from the economy for three decades, and we’ve had the longest two expansions during that time period. Higher inflation can help businesses raise prices and boost economic activity. But low inflation means the Fed can afford to keep rates low to give businesses a break.
The Fed chair noted this isn’t the 1970s, when inflation ran amok and businesses kept raising prices without stopping. Those dynamics don’t exist in this economy.
“It’s still there, but it’s a faint heartbeat compared to what it was,” Powell said.
Has Fed Chair Jerome Powell spoken to Janet Yellen, the former chair of the Federal Reserve and Powell’s old boss, since she was nominated to be President-elect Joe Biden’s Treasury secretary?
Yes.
“We’ve had and I’ve had the typical meetings with the transition team,” Powell said at a press conference. “I really have only spoken to Yellen to congratulate her. I worked very closely with her, and I’ve stayed in touch. I look forward to working with her, but I won’t talk policy with her until she’s confirmed.”
Health and safety are crucial to the success of the US economy. That’s bad news for right now … but potentially encouraging news for the spring and summer.
Case numbers are astronomically high in the United States, and that hurts businesses that rely on people congregating with one another – bars, restaurants, etc. At a press conference, Federal Reserve Chairman Jerome Powell said he expects the first-quarter economy will “show significant effects from this.”
But the first Americans have begun to get vaccinated. And although Powell admitted the Fed governors “don’t have any experience with this,” he believes that by the middle of 2021, as a significant number of people get vaccinated, people will begin feeling comfortable going out and spending money again.
“Some people will be probably quick to do that. Some are doing it now without a vaccine in many parts of the country,” he said. “Nonetheless, my expectation and many people have the expectation that the second half of next year the economy should perform strongly. We should be getting people back to work. Businesses should be reopening and that kind of thing.”
Federal Reserve Chairman Jerome Powell wants you to know two things: 1) The economy is in deep trouble and 2) the Fed is going to do everything in its power to fix it, no matter how long that could take.
In strong language, Powell said at a press conference that the current situation could take a turn south, and the Fed is prepared to spend more money to ensure the economy’s problems are solved:
Yes, the vaccine is coming. No, it’s not going to help the economy until enough people get it. And that could take many months.
In the meantime, people need to help one another stay safe, limit the spread of the virus and keep businesses open, Federal Reserve Chairman Jerome Powell said in a press conference.
The Federal Reserve, as widely expected, left interest rates near zero following its latest policy meeting Wednesday. The Fed cut rates to that level in March and has maintained that they are likely to remain there for several years as the economy recovers from the Covid-19 pandemic.
There are growing hopes that a new round of fiscal stimulus may be coming soon from politicians in Washington – and perhaps more will be done once President-elect Joe Biden takes office next month.
Stocks’ reactions were muted: The Dow was down about 100 points or 0.3%. The S&P 500 was flat and the Nasdaq was up 0.1%.
Anhony Scaramucci, Skybridge Capital’s founder, believes your portfolio might be missing out on bitcoin. But you’ve got to have the stomach for it.
On CNN Business’ “Markets Now” live show, Scaramucci said people have begun to accept bitcoin – and since it appears in so few portfolios, it has plenty of room to grow.
Still, bitcoin is a volatile asset and will be a risky holding if you invest in it.
“This thing has a tendency to crash,” he said. “This thing is crashing upwards and these things can be violent.”
He believes stocks will continue to rise, too, despite sky-high valuations.
“There’s a tremendous amount of pent-up demand,” Scaramucci said, suggesting people want to get out and spend money once again.
“When that starts to happen, the numbers we’re seeing from the stock market will make sense,” he added, noting stock markets look ahead, rather than backward.
“I wouldn’t bet against the stock market,” he said.
Former Trump White House Communications Director Anthony Scaramucci believes President Donald Trump will leave the White House peacefully on January 20.
“I don’t think it’ll take a moving van to get him out of the White House,” said Scaramucci, Skybridge Capital’s founder, on CNN Business’ “Markets Now” live show.
“He’s figured out another scheme,” Scaramucci said. “He’s raised $300,000 and will use it for his forward operations.”
Scaramucci predicted Trump will “leave without any ceremony,” though the big question remains whether he will attend President-elect Joe Biden’s inauguration.
“I think he will,” Scaramucci said.
After Trump, Scaramucci predicts a civil war within the Republican party. He predicted a large group of legislators will break off from the GOP and form a new center-right, including Senators Joe Manchin, Susan Collins and Lisa Murkowski.
“They could become the most powerful group in the Senate,” he said.
Calling Trumpism “demagoguery and nationalism,” Scaramucci predicted “Trumpism will fall very quickly” after the president leaves office.
Joey Zwillinger, Allbirds’ CEO, says his business model worked perfectly for the pandemic.
“Our business was not just able to maneuver through this crisis, but really thrive,” he said on CNN Business’ “Markets Now” live show.
Zwillinger said Allbirds’ exclusively direct-to-consumer model helped it as people shunned stores – and company’s eco-friendly products and limited number of choices helped too. He called Allbirds “the antidote to fast fashion.”
“People want amazing performance out of their products and they don’t want to sacrifice the planet,” he said. “We’re feeling consumer confidence is really high.”
The Fed has left rates sitting at zero to boost the economy through the deepest recession since the Great Depression. But that leaves many companies, which are swimming in debt, in a perilous position.
Investors have been buying up stocks like there’s no tomorrow – and they could be left holding the bag.
“The Fed is playing with fire,” said Danielle DiMartino Booth, Quill Intelligence CEO and Chief Strategist on CNN Business’ Markets Now live show. “It’s stoking fear. If they do anything remotely conservative, markets will tank.”
Booth said she believes stocks, which are near record highs, are in a Fed-induced bubble.
“The Fed, coming in alleviating the problem created by over-leveraged companies, added more leverage,” she said. “Companies are basically the walking dead.”
Federal Reserve Chairman Jerome Powell is set for another press conference at 2:30 pm today. What does the market want to hear from him?
Anything. Literally anything.
“The market wants to hear something – anything,” said Danielle DiMartino Booth, Quill Intelligence CEO and Chief Strategist on CNN Business’ Markets Now live show.
Booth said since the Fed took rates down to zero, it hasn’t been able to help give markets an idea of when the economy is going to stabilize and whether the Fed will act again to shore up stocks.
“Since the ‘bazooka moment,’ the Fed hasn’t really done anything,” she said. “Markets want to hear something from Jay Powell today when he hits that podium.”
Be careful what you “WISH” for? Shares of ContextLogic (WISH), the parent company of mobile shopping firm Wish, fell more than 5% in their market debut Wednesday.
Wish was the latest unicorn to test investors’ seemingly insatiable demand for initial public offerings. The San Francisco-based company priced its IPO at $24 a share – the high end of its range – and raised more than $1 billion from the stock sale.
The IPO valued Wish at about $17 billion, though the company is losing money despite strong revenue growth .
But investors didn’t seem as excited about Wish as they were about last week’s debuts of DoorDash (DASH) and Airbnb (ABNB). Those stocks soared on their first day of trading.
It’s possible that Wish is a casualty of the trade war between the US and China during the Trump presidency, as Wish noted in its IPO filing that most of its goods come from China-based merchants.
The company added that any further “economic tension,” i.e. tariffs or restrictions on Chinese firms, could be a problem. Beyond the consideration about its merchants, Wish also has offices in China.
Bitcoin’s scintillating run to above $20,000 has digital currency investors excited about what’s next for the leading crypto. Here’s a look at what some experts told CNN Business Wednesday after bitcoin (XBT) hit a new record.
US stocks opened flat as investors wait for more information about the economic recovery from the Federal Reserve later this afternoon.
A November retail sales report this morning disappointed, showing sales fell 1.1% last month from October, the Commerce Department said Wednesday. Sales were expected to be down 0.3% month-over-month in November, according to a survey of analysts compiled by Refinitiv.
Is this the beginning of reefer merger madness? Canadian cannabis companies Tilray (TLRY) and Aphria (APHA) announced plans to combine Wednesday in a nearly $4 billion deal that will create the world’s largest marijuana company. The two firms reported a combined $685 million in sales in the past twelve months.
The news comes as cannabis stocks have surged in the past month after several more US states voted to legalize cannabis for recreational use and investors hope for further federal decriminalization efforts now that Joe Biden has been elected as the 46th president.
Shares of Tilray soared nearly 25% on the news Wednesday and Aphria was up 3%.
Aphria chairman and CEO Irwin Simon, who will lead the combined company after the merger, said in a press release that the two firms hope to “create a leading global cannabis and consumer packaged goods company with a portfolio of medical, wellness and adult-use brands consumers love.”
The deal creates a company that could be able to compete more effectively against the likes of Canopy Growth (CGC) and Cronos Group (CRON) – two other Canadian cannabis leaders that have the financial backing of US consumer products giants.
Corona owner Constellation Brands (STZ) has a big stake in Canopy while Marlboro parent Altria (MO) has invested in Cronos – although both American firms have struggled with those cannabis investments so far.
After flirting with the $20,000 level for the past month or so, bitcoin prices finally topped the $20K mark on Wednesday. Prices rose nearly 5% to a new record high above $20,400.
Bitcoin (XBT) has been on a tear this year, nearly tripling as investors flocked to bitcoin and other cryptocurrencies during the pandemic. Bitcoin’s appeal has grown as the US dollar has weakened.
With the Federal Reserve expected to leave interest rates near zero for several more years, bitcoin may continue to win new fans.
Well-known names are adding to bitcoin’s mainstream appeal this year. A top executive at BlackRock (BLK) has even said the cryptocurrency can replace gold, and payments giants Square (SQ) and PayPal (PYPL) have both embraced bitcoin too.
Chili’s owner Brinker International (EAT) said it’s withdrawing its second-quarter outlook because of the pandemic that’s forcing dining rooms in some states to close or limit capacity … again.
Restaurant sales were down just 1% from a year ago in the beginning of October. That slid to nearly 14% in December as Covid-19 cases climbed throughout the United States.
Brinker’s shares fell 2% in premarket trading.
China’s luxury market has proved “unstoppable” this year even as the coronavirus pandemic hammered global demand for expensive goods.
That’s according to a report released Wednesday by Alibaba’s (BABA) TMall shopping platform and the consultancy Bain, which said the Chinese luxury market would grow by 48% this year to about 346 billion yuan ($52.9 billion) despite the pandemic.
The growth will almost double mainland China’s overall share of the global industry from 11% last year to 20% in 2020, the firms said.
US stock futures were slightly higher, as investors wait for more information about the economic recovery from the Federal Reserve at 2 pm ET. They’ll also get a glimpse at retail sales during the holiday shopping season.
FEAR & GREED: 69 = Greed
‘BACK TO NORMAL’ INDEX: The US Economy is 80% ‘back to normal’
Stocks look to continue their year-end rally after finishing higher Tuesday. The Dow and S&P 500 ended the day just below their all-time closing highs while the Nasdaq notched a new record.
