After the CPI shock earlier in the week, Wall Street braces for a fresh round of data, including retail sales, on Thursday, with a deepening yield curve inversion between 2-year and 10-year bonds it sends out increasingly gloomy economic signals. However, there is good news, as a disastrous rail strike can be averted.
There is no billionaire investor and hedge fund manager to cheer for Ray Dalio, who in our call of the day claims that the Fed has no choice but to keep raising interest rates, at a high price for stocks.
And you’re putting some pretty accurate guesses out there. “I estimate that an increase in rates from where they are to around 4.5% will produce a negative impact of around 20% on share prices,” Dalio said in a statement. LinkedIn Post dated Tuesday.
Some are forecasting The Fed could raise interest rates by 100 basis points next week, a move not seen since the equally inflationary 1980s. The central bank’s short-term rate ranges from 2.25% to 2.5%, but Nomura, for his part, sees that rate heading for 4.75% by 2023.
But Dalio believes that interest rates could even reach the upper end of a range of 4.5% to 6%. “This will reduce private sector credit growth, which will reduce private sector spending and therefore the economy,” he says.
Behind this prediction is the Bridgewater Associates founder’s belief that the market is severely underestimating where inflation will end up: at 2.6% over the next 10 years versus what he sees as 4.5% to 5% over the median. term, except shocks.
Read: Why a single US inflation report hit global financial markets and what’s next
As for what happens when people start losing money in the markets, the so-called “wealth effect,” expect less spending as they and their lenders become more cautious.
“The upshot is that it seems likely to me that the rate of inflation will remain significantly above what the people and the Fed want it to be (while the year-over-year rate of inflation will fall), that interest rates will rise, that others the markets will fall and the economy will be weaker than expected, and that without taking into account the worsening trends of internal and external conflicts and their effects”.
The markets
have become mixed, with Treasury yields
BX:TMUBMUSD10Y
escalation and the dollar
DXY
easing a bit.
oil prices
CL
lean south, next to the gold
GC00.
chinese stocks
CN:SHCOMP
fell after the country’s central bank left rates unchanged. Natural gas prices in Europe
GWM00
they are on the rise again. bitcoin
BTCUSD
it is listed at just over $20,000.
The buzz
Union Pacific Stock
ONE P,
south norfolk
NSC
and CSX
csx
are recovering in premarket after the White House said it has reached tentative rail deal with unions. No deal for Friday would mean strikes and havoc for supply chains, grain markets and even The next vacations. read more here.
In addition to August retail sales, we’ll get weekly jobless claims, the Philly Fed and Empire State manufacturing indices, and import prices. Industrial production and commercial inventories will follow.
adobe shares
ADBE
are falling after a report that the software company is considering a $20 billion deal to buy graphic design company Figma.
Vitalik Buterin, one of the co-founders of Ethereum, says that the so-called merger is done, which means the birth of a more environmentally friendly crypto. Ethereal
ETHUSD
It’s a bit up at the moment.
a new demand claims tesla
TSLA
has made false promises about Autopilot and Full Self Driving features. And move on Tesla, Apple
AAPL
it is Now Wall Street’s Biggest Short Bet.
ericsson
Eric
is falling after a double downgrade at Credit Suisse, which cited inflationary headwinds. Analysts lifted Nokia
FI:NOKIA
to overcome, although the action barely moves.
Cathie Wood Ark Investment Management went on a dip buy spray after Tuesday’s market crash, picking up mostly Roku
ROKU.
Opinions: Pinterest has never been considered a social network. until now.
The Patagonian billionaire Yvon Chouinard is donating your entire business — worth $3 billion — to the climate fight.
The best of the web
No US shale bailout for Europe.
Turkey finds an additional $24.4 billion lying around.
The queue to pay your respects to Queen is 2.6 miles long and growing.
the tickers
These were the most searched tickers on MarketWatch at 6 a.m. ET:
|
Heart |
security name |
| TSLA |
Tesla |
| GME |
stop the game |
| AMC |
AMC Entertainment |
| bbby |
Bed bath and beyond |
| HKD |
AMD Digital |
| LITTLE BOY |
LITTLE BOY |
| AAPL |
Apple |
| BOW |
AMC Entertainment Preferred Stock |
| AMZN |
Amazon |
| NVDA |
nvidia |
random reads
Scientists try to teach robots comedy time
Sausage, mozzarella, battered. Meet the South Korean hot dog.
Need to Know starts early and updates until the opening bell, but sign up here to receive it once in your email box. The emailed version will be sent at approximately 7:30 am ET.
