INSUBCONTINENT EXCLUSIVE:
By Elena PopinaDonald Trump loves to bash Jerome Powell, blaming him for the market meltdown
the president is totally wrong.
Signs of Fed-fomented stress are everywhere, from slumping bank stocks to the 33 per cent plunge in home
the refrain, and the economy can absorb some tightening
watched $10 trillion lopped from US equity prices in a month, even as bonds and currency remained calm
And while stocks are clearly their own animal, all hair-trigger volatility and bloated valuations, the possibility they are acting as a
center of the tempest is in rate-sensitive groups like homebuilders and banks
Building companies have tumbled in nine of the past 10 weeks as higher borrowing costs contributed to disappointing housing data
Banks, normally beneficiaries of higher rates, have slumped 15 per cent on concern rising financing costs have crimped loans.
A related sign
is the brighter distinctions investors are making among sectors, favoring those with less exposure to the economy
staples by the most since 2009
Utilities, one of the least crowded groups in the SP, outperformed industrials by the most since the financial crisis
The trend is here to stay, according to Aidan Garrib.
For the week, consumer discretionary stocks slid 1.4 per cent, pushing the SP 500
toward a 3.9 per cent slump
The Dow Jones fell 3 per cent and the Cboe Volatility Index rose to 24.40 after closing above 25 on Wednesday for the first time since the
February rout.
A more abstract concern relates to the reception corporate earnings received this season
Correlations, which usually loosen as corporate results cause individual stocks to chart their own course, never unwound, and in fact got
or lower to alter its pace
That means the strike price on any so-called Powell put would require further downside of at least 6 per cent.
At the same time, bond
traders are now barely pricing in two rate hikes between year-end 2018 and year-end 2020, eurodollar futures data show
The Fed projections, released a month ago with stocks near records, call for twice as many over that period.
While signs abound that
investors are paying a price for Fed hawkishness, other parts of the market are saying the hawkishness is misplaced
Indexes compiled by Citigroup group stocks by whether they do well or badly when inflation rises
developed-nation currencies remains well below its highs for the year, according to a JPMorgan Chase Co
In the government bond market, 10-year Treasury yields just had their biggest weekly decline in two years
An indicator that plots expectations for price pressures in that market by via rates on inflation-protected bonds is starting to show that
