Wall Street is on a knife edge until Jay Powell speaks up

We’re not the only ones fixated on Wednesday’s policy announcement. Financial markets are on a knife’s edge, and have been for weeks, as they await word on how much central banks expect to tighten money. The stock has fallen four times in the past five weeks.

On Monday, Wall Street wavered between gains and losses in what was effectively a holding pattern as investors awaited word from the Silver Fox himself, Federal Reserve Chairman Jerome Hayden Powell.

Here’s the deal: On Wednesday afternoon, the Fed will announce its next rate move, which will almost certainly be three-quarters of a point, to 75 basis points, for the third time in a row.

But the possibility is not insignificant, given the stubbornness of inflation, that the Fed will go HAM and raise rates by a full point, something the US central bank has never done before. As of Monday, just 16% of investors were counting on a full point increase, according to the CME FedWatch tool.

What happens after that? It’s anyone’s guess.

Wall Street is divided on whether the Fed will continue to raise rates aggressively in November or if inflationary pressures will cool enough for the central bank to slow down a bit, my colleague Paul R. La Monica writes.

Raise rates too much, we’ll have a recession. Don’t raise them high enough, and we get spiraling inflation (and eventually recession). And, as Paul explains, stocks are volatile one way or another.

One person who lands firmly in the optimistic camp is President Joe Biden. On Sunday, Biden focused on the positive, saying “we’re going to get inflation under control” in an interview with CBS.

He touted his administration’s gains in the labor market, which added 10 million new jobs since taking office, and investments in the semiconductor industry.

One person in the pessimistic camp is, well, me. So here are my two cents:

As I wrote here last week, many of the key drivers of inflation – supply chain bottlenecks, the war in Ukraine, the Covid lockdowns, the desire to fatten corporate America’s profit margins – are not things the Fed or the White House can fix. . To reduce demand, the Fed can only control one side of the equation. The president can help oil the global supply chain, but he can’t unilaterally remove the grain from the war zone, or (better yet) end the war.

I blame FedEx for my angry mood.

ICYMI last week, the package courier, who serves as something of an economic innovator, issued a rather grim pre-earnings warning to investors. The company withdrew full-year guidance, saying the economic slowdown will cause it to fall $500 million short of its revenue target.

FedEx CEO Raj Subramaniam told CNBC last week that he believes we are about to enter a global recession, spooking nearly everyone on Wall Street and prompting a wild selloff. FedEx shares fell 21% on Friday, the biggest one-day drop ever.

The FedEx fiasco could be a harbinger of more bad news to come next month, when third-quarter earnings season begins.

COMPOSITION OF THE DAY

“If we see prolonged inflation now, it will be embarrassing for this country, and it will further reduce trust in institutions.”

– Robert Shiller, the economist who won the Nobel Prize at Yale University, says that central banks have no choice but to hold the line when it comes to fighting inflation. In an interview with my colleague Julia Horowitz, Shiller discusses why rising prices can be so difficult to combat, and why the Fed may want to make a full percentage point rate hike.

HBD 🎂🎁🥳

Forty years ago today, at 11:44 am, the emoji was born stitched together as a colon, a dash, and a closed parenthesis. It looked like this 🙂

Long before 😍, 😩, and 🧐 (my favorite) and thousands of others, we had the analog smiley face known as emoticons, created by Scott Fahlman, a computer science professor at Carnegie Mellon University.

Fahlman wasn’t trying to revolutionize the way we communicate online; he was tired of misreading and sarcasm in a school intranet newsletter.

“One person wouldn’t get the joke and would respond with anger, hostility, and pretty soon the initial discussion was gone, and everyone was arguing with everyone else,” Fahlman told colleague Jennifer Korn.

Of course, emoticons became emojis (style note: the plural of emoji is emoji), and our text conversations added a whole new layer of meaning. Like, check this out:

OK, fine 😂

OK, fine 😔

OK, fine 🙃

OK, fine 🙄

…You get the idea.

Today, there are more than 3,600 emojis, overseen by the non-profit Unicode Consortium.

“Having 3,000 or more pictures that you can access with a fingertip is like having 3,000 more dots,” said Jeremy Burge, creator of Emojipedia. “So while I think we could get by without it, I don’t know why you would choose to live in a world without emoji.”

Read Jennifer’s fascinating history of the humble emoji here.

TODAY’S NUMBER: $250,000

Google, one of the premiere tech companies of our time, is paying $250,000 to an engineer who just hit the big ticket. The problem is that the guy never worked at Google.

Sam Curry, a security engineer at cryptocurrency company Yuga Labs, tweeted last week that he has been trying to get in touch with someone at Google for more than three weeks. “Is there a way to contact @Google? It’s okay if you don’t want to get back.”

Unfortunately, Google wants to bring it back. The company blamed the error on “human error.”

MY NUMBER TWO: In addition to keeping that money for Curry, Google shouldn’t claw back. I’m not a lawyer, but I think that’s the fair and just result when a trillion dollar company with almost unlimited power to control almost the entire internet hands over their pocket change.

In 2020 Citibank mistakenly wired $900 million to a bunch of lenders, many of the companies that received the money refused to pay it back. And so far, at least, the courts have sided with these companies. (She calls Citi to try to recover the funds.)

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