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For a long time, for more than a year, financial management has been relatively flat, and stocks have risen. This gives people an anxious feeling that something must go wrong and puts pressure on some of the bubbles in the stock market.
Earlier this month, Janet Yellen was responsible for getting rid of some bubbles.In an event hosted by The Atlantic, the former chairman of the Federal Reserve and the current U.S. Treasury Secretary Frightening words In the minds of some market participants: “Maybe in order to ensure that our economy does not overheat, interest rates must be raised.”
It is ridiculous that this will not cause any market reaction at all. The Fed cut interest rates to zero and opened the stimulus hose during the coronavirus crisis last year. Now, it is pleasing that the vaccination rate in the United States is very high, while the infection rate is declining. Business quickly returned to normal. In fact, it creates bottlenecks quickly enough and causes supply problems for everything from wood to labor.
There is no need for rocket scientists to understand how this might develop.It’s stupid to make a prediction, but I’m going to stretch my neck here: next U.S. interest rates will rise,Not low.
But: bring out the smell of salt. After Yellen’s comments, some technology stocks that have shined in the past 12 months plummeted, and the Nasdaq Composite Index closed down nearly 2%. Yellen himself quickly clarified his words. She did not “predict or suggest” a rate hike, anyway, it no longer belongs to her field.
Some analysts described the Finance Minister’s words as a turbulent step. The calm head thought it was an obvious statement. The market’s response highlights that the skin of some investors has become thinner, and monetary and fiscal policy makers need to choose their words carefully.
Paul Donovan, chief economist at UBS Wealth Management, wrote: “The market seems determined to pass.” “Consumer price increases in every economy are telling us a year ago Oil prices. This is not a problem, but the market wants to worry about something.”
This week’s market trends once again showed strong concerns.On Tuesday, high-growth technology stocks Drop The inflation rate in the United States is expected to be high on Wednesday.On Wednesday, they Down again Facts have proved that inflation is indeed very hot.
The latest assessment of U.S. consumer prices shows Rise 4.2% This was April a year ago-the biggest drop since September 2008. In April alone, the prices of used cars and trucks rose by 10%, accounting for a large part of the overall index increase.
Again, despite this, this shouldn’t be a huge surprise.
Gregory Perdon, co-chief investment officer of private bank Arbuthnot Latham, said: “Wall Street seems to be climbing the wall of worry.” “The bears are always looking for signs that the world is about to end. They put forward all the potential. Excuse. The reality is that the only important question is whether the reopening is normal. Everything is going well. Europe is working together.”
A reasonable assumption is always that the Fed likes to provide unexpected stimulus. It does not like to shake the system with unforeseen austerity measures, thereby limiting the financial situation. Therefore, despite the central bank’s promise to maintain ultra-loose policy even when inflation exceeds the target, some interest rate setters have begun to prepare for the market in order to eventually return to normal. The past few days and weeks have shown that investors will have to learn to live with this.
The volatility is concentrated on avid high-tech stocks and it feels like the right place.This is bad news, for example, if you are the Ark Cathie Wood.Her flagship innovation fund tracks technology stocks owned Drop This is more than a third higher than the peak in February.
Stocks closely related to Bitcoin and newly listed US companies have also experienced difficult times. All this is catching up with the impact of the bond market in the first quarter. Fixed-income experts, who were messed up at best, turned to prices when inflation increased earlier this year. It is worth noting that although the US 10-year Treasury bond yield rose on Wednesday after the release of inflation data, it did not hit a new high.
Investors in unprofitable companies are in a precarious position after an amazing run. For everyone else, except those who truly believe that inflation will get out of control, it is time to prepare for frequent stressful tests.
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