June 23, 2022 TradeUP Thursday Latest news and bulletin updates
Dow Jones 30,570(+0.30%)
S&P 500 3,733(+0.51%)
(Opening price as of 06/23/2022 compared to last close)
Powell warns of challenging soft landing and potential recession
Biden calls for federal and state governments to temporarily suspend gas taxes
US house sales fall while median prices rise
Bitcoin falls below $20k during the weekend
Share Your Thoughts:
Powell says US can handle tighter policy, will that be the cure for inflation?
Last week the Fed raised the interest rate by .75%, the biggest hike in three decades. Federal Reserve Chairman Jerome Powell said the hike is necessary to rein in skyrocketing inflation. During his testimony on Wed, Powell said that the Fed plans to continue raising rates until proof of inflation slowdown is clear. Will tight monetary policy be the cure for inflation?
Stocks have gyrated in recent weeks as soaring inflation and slowing growth concern hang over markets. Investors and corporate executives are worried that the recession has hit consumer confidence, hence will lead to a hard landing on monetary policy. The table below shows recent comments from corporate executives and former government officials.
Recession fears weighed on worsening economic data and recent news:
-U.S. home sales slid as prices broke above $400k for the first time
-Retailers, such as Target, are slashing prices to get rid of excess inventory
-Tech companies, such as Coinbase, started to layoff or freeze hirings
Can we conclude that the Fed tightening has led to recession in the U.S. economy?
Fed tightening might be a direct result for higher lending rate, which will in turn negatively affect the housing market. However, inventory management and tech companies’ layoffs are less directly linked to rate hikes. Recession is more likely a self-fulfilling process that occurs when more people are convinced that the economy is slowing down. The Fed is aggressively hiking rates and implying more to come, which will, without doubt, further decrease economic activities by increasing the cost of capital.
Powell believes hot inflation should be tamed through decreasing demand. However, it is the supply shortage, including that of energy, products, and workers, that caused prices to rise. Cutting down money supply to subside consumer demand is just like to get rid of cold symptoms using chemo — which kill healthy cells while attempting to solve the problem. Furthermore, the public is encouraging this overaggressive monetary policy by blaming Fed for consumer prices, which hit a 4-decade high.
The Fed is limited in capabilities to increase supply to tame inflation. How far do you think the Fed will go on rate hikes in July?
Share your thoughts with us for a chance to win a free stock!
#1. Powell warns of challenging soft landing and potential recession
• Fed’s Powell reiterated his commitment to tame inflation and acknowledged the risk of recession. He admitted that the Fed had failed to get its job done and said that it would be difficult to engineer a soft landing.
• Last week the central bank raised rates by 75 bps, the largest single increase in 3 decades. An additional movement of this magnitude is expected for July. Market expects the federal funds rate to reach 3.6% by Q1 2023.
#2. Biden calls for federal and state governments to temporarily suspend gas taxes
• A suspension of the 18.4-cents-a-gallon federal gasoline tax and 24.4-cents-a-gallon diesel tax through September would require congressional approval.
• If the gas savings were fully passed along to consumers, people would save roughly 3.6% at the pump when prices are averaging about $5 a gallon nationwide.
• The initiative faces bipartisan resistance. Republicans widely oppose lifting the tax while Speaker Pelosi made no commitments on bringing the matter to vote.
#3. US house sales fell for fourth consecutive month in May, with median home price hitting all-time high
• Residential property sales have reached their lowest point since May 2020, driven by a 12-year high 30-year fixed mortgage rate and surging house prices.
• Despite the decline, properties currently stay on the market for a record average low of 16 days due to a short supply. 88% of homes sold last month were available for less than 30 days.
#4. Bitcoin falls below $20k during the weekend; Musk spurs “meme coin” rally; ProShares announces bitcoin short ETF
• Bitcoin fell below $20k twice this week during trading over the weekend and Monday, reaching an 18-month low of $17,601.
• Musk doubled down on support for Dogecoin. During a conference on Tuesday, the billionaire described how he bought and supported the currency. Dogecoin saw a brief rally on Wednesday.
• ProShares launched a bitcoin short ETF (BITI) on Tuesday, 8 months after the establishment of its first US bitcoin futures ETF. It is the third such product to hit global markets since April of this year as crypto experts predict winter for the asset class.
TradeUP Securities Inc.: TradeUP Securities, Inc. (“TradeUP Securities”) is a registered brokerage firm at SEC (CRD: 18483; SEC: 8-36754), a member of FINRA/SIPC and a member of DTC/NSCC, regulated by the US Securities and Exchange Commission and Financial Industry Regulatory Authority. Check the background on the firm on FINRA’s BrokerCheck (https://brokercheck.finra.org).
Qualifying comments will be reviewed to select the winner of a share of free stock worth $10-15. In order to receive the free stock, the commentor must have a funded TradeUP account. The winner will be contacted via private message through our social media account for detailed information on claiming their reward. Not Advice: The information contained in this material is for informational purposes only and is not intended to provide professional, investment or any other type of advice or recommendation, or to create a fiduciary relationship. TradeUP Securities does not make any representation or warranty, express or implied, regarding the accuracy, reliability, completeness, appropriateness or sufficiency for any purpose of any information included in this material. Certain information may have been provided by third-party sources and, while believed to be reliable, has not been independently verified by TradeUP Securities, and its accuracy or completeness cannot be guaranteed. You should not make an investment decision in reliance on this material, which is based on information that is likely to change without notice.
Not An Offer or Solicitation: Nothing contained in this material is, or should be construed as, an offer, a solicitation of an offer or an invitation to buy or sell any security or derivative, and it is not intended for distribution in any jurisdiction where such distribution would be contrary to law.
Risk of Loss. Securities and derivatives transactions involve risk of loss, including loss of principal. You should weigh potential benefits against the risks. Past performance is no guarantee of future results.
Not a Valuation: This material is not an official valuation of any security or derivative mentioned herein. Any pricing information provided is indicative only and does not reflect a level at which TradeUP Securities may be prepared to execute a trade; nor is it intended to demonstrate actual results that may be achieved by any transaction.
Electronic Trading: Electronic trading poses unique risks to investors. System response and access times may vary due to market conditions, system performance, and other factors. Market volatility, volume, and system availability may delay account access and trade executions.
If you no longer wish to receive notifications like this, you can unsubscribe any time.