Jerome Powell’s Fed Rate Hike – Everything You Need to Know

Good morning.Phil Rosen, here, writing to us just blocks away from downtown Manhattan’s Federal Reserve Building. 

There are 10 central banks around the world that will make interest rate decisions over the coming days. However, the Fed is the focus of all attention. 

Michael Reinking, senior market strategist at the New York Stock Exchange, said it well: “Central Bank Week may not be as popular as Shark Week, but it’s beginning to feel a bit similar with traders starting to smell some blood in it.”

Today, I am breaking down what the Fed’s 3rd Jumbo Rate Increase means for markets and how they could react to it.

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1. Federal Reserve made an unprecedented decision to raise its rate by a third time. However, extraordinary inflation requires extraordinary measures.

August’s hot Consumer Price Index report shattered any hopes that Fed officials would ease their hawkish policies. Jerome Powell, however, has reiterated his resolve to keep inflation under control. 8.3% higherThis is a higher percentage than one year ago.

Mimi Duff, GenTrust’s managing director, said that Powell would have to avoid making the 1980s Volcker-esque error that led to the recession. 

“Powell would like to be more predictable [than Volcker]She stated that she needed to see convincing evidence of inflation falling. To do this, rates must be kept in a restrictive zone for a long time.

Duff doesn’t expect markets react to too much, but he does not doubt that they will.To a 75-basis points move, since it’s largely priced in already. She did however note that the threat to further jumbo movements could pressure stocks.

Powell will be responsible for stabilizing the prices and balancing them. NotTipping the economy into full-blown depression. GenTrust estimates that 25% of the chance of a hard-landing is possible, and that three-in-four people are at risk of an economic recession. 

There are many opinions on how to manage inflation. Wharton’s Jeremy Siegel believes just 100 basis points are needed before the Fed can pivot. Larry Summers, former Treasury secretary, says it’s not surprising if the Fed rises above 5%.

David Rubenstein, a billionaire, warned that this week’s 100-basis point increase would be detrimental to this particular meeting. Investors and markets that are vulnerable to shock and depressing events. 

CFRA Research stated in a similar manner that a full-point rise would also be feasible Wall Street is unnerving, which increases the chance that the FOMC will tighten. 

It is possible that it is still early.But, looking ahead to November’s meeting, there is a possibility that the Fed might opt for a smaller Fed. 50-basis point move. 

Markets are currently pricing in a 80% chance that November will see another 75 basis point hike, but we believe 50bp is more likely. Apathetic state of the housing market“Is a key factor for our forecast,” Pantheon Macroeconomics’ chief economist wrote in a note.

What are the prospects for markets after a third consecutive big rate hike? Is it effective in controlling inflation? Email prosen@insider.comTweet @philrosenn.  

Other news:

2. Stock futures in the US rose early Wednesday Along with oil and gold. It’s the Russian President Vladimir Putin. He has increased his war efforts to UkraineAnd Russia may be ready to use nuclear weapons, as it was hinted atThis will have an impact on markets that had been bracing themselves for the Fed’s rate increase decision at 2:05 p.m. ET. Here are the latest market developments.

3. Earnings on deck: General Mills Inc., Lennar Corp. and Games Workshop Group PLC are all Reporting. 

4. Morgan Stanley stated that these 23 stocks offer high, stable and growing dividend yields. An analyst team from the firm selected names that met their “dividend sweet spots” criteria. Here are their current favorites.

5. These seven countries may see an increase in Russian crude imports in 2023, as Europe’s new sanctions take effect.Research firm Kpler estimates that roughly 1,000,000 barrels of Russian crude oil could be shipped to buyers in Pakistan, South Africa and Indonesia. The complete forecast is available here.

6. Alameda, owned by Sam Bankman-Fried, will repay $200 million in bitcoins and ether to Voyager. This is a loan that was taken over by Alameda during the crypto winter. Before the digital asset slump, which was caused by high inflation, rising interest rate and traders fleeing risky investments, the loan was valued at $377 million. Despite it all, Bankman-Fried, a billionaire, has remained a rescuer of struggling crypto companies.

7. The highest rate of Russian gold flooding Switzerland in over two years is the fastest. The bullion, which was originally from Russia, was imported by the nation in a total of $320 million. The bullion was refined and stored at the UK. Investors might consider remelting the gold at Swiss refineries in order to resell it.

8. The black swan fund was reported to have earned 4,144% during the 2020 market crash. Universa’s flagship funds made enormous gains in the midst of a severe stock market crash two years ago. The company’s COO explained why they haven’t entered the crypto sector yet — These are the three things that might convince them to join.

9. An expert fund manager explained how his inflation-focused ETF navigates crippling price growth, and the potential for “significant economic destruction.”Insider spoke with David Schasler from VanEck about what he looks for in markets. Here are his top tips for investors.

10. Ford shares fell as high as 13% after Ford said that supply-chain inflation could cause profits to drop by $1 billion. Yesterday’s stock trading session was the worst in over a decade, and legacy vehicle company lost billions of market value. You can read the full article here.

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Phil Rosen in New York curated this collection. (Feedback or tips Email prosen@insider.comTweet @philrosenn).

Max Adams edits (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.