Good morning. I'm Phil Rosen, writing to you from New York.
On Thursday, Queen Elizabeth II died at 96, bringing her unprecedented 70-year reign to a close. She was Britain's longest-reigning monarch, and inherited the crown from her father in 1952. You can read Insider's obituary of the late queen here.
And in markets, today I'm breaking down Europe's biggest interest rate hike ever — what it means, why it happened, and what comes next.
If this was forwarded to you, sign up here. Download Insider's app here.
Pool/Getty Images
1. The European Central Bank raised interest rates by 75 basis points on Thursday, mirroring the Federal Reserve and continuing the trend of economies around the world grappling with rising rates and rampant inflation.
The move comes as a step "to dampen demand and guard against the risk of a persistent upward shift in inflation expectations," the central bank said in a statement.
The hike — the ECB's largest ever — is the second in as many meetings this summer, and comes as inflation in the Eurozone hit 9.1% in August, up from 8.9% in July.
And the bank signaled that there's more hawkishness to come as the continent faces economic and geopolitical uncertainty.
War in Ukraine and tight energy markets have weighed on consumers too, with both food and power prices soaring in recent months.
The US central bank has already made a series of outsize rate hikes in 2022, and Goldman Sachs predicts another one this month.
The bank revised its September forecast this week from 50 basis points to 75, and it expects a November increase of 50 basis points.
"[Fed] officials have sounded hawkish recently and have seemed to imply that progress toward taming inflation has not been as uniform or as rapid as they would like," Goldman Sachs chief economist Jan Hatzius said in a note to clients.
But what do these policy moves actually mean for everyday people?
The ECB and Fed's rate hikes make your credit cards, mortgages, and car loans more expensive — and that's the point.
When things get more expensive, the economy can "cool down," because consumers will be spending less and pulling back on spending into an overheated economy.
In short: Higher interest rates means borrowing costs go up, which means spending goes down (because things get more expensive) — which in theory is meant to tame inflation.
Wall Street is expecting a 75 basis point hike this month from the Fed. What do you expect? Is that too big or too small of a move? Email prosen@insider.com or tweet @philrosenn.
In other news:
Mikhail Svetlov/Getty Images
2. US stock futures rise early Friday, as traders weigh Federal Reserve Chair Jerome Powell's latest comments on inflation. Meanwhile, bitcoin is trading above $20,700 and the US dollar has fallen after touching a 20-year high on Wednesday. Here are the latest market moves.
3. On the docket: Nike Inc., Kroger, and Avio, all reporting.
4. Morningstar recommends targeting these high-quality stocks that are poised for long-term gains. The current market is ridden with bear-market traps, and avoiding them is key for stock-pickers in this unpredictable environment. See the nine names here.
5. A Berkshire Hathaway analyst warned the conglomerate's stock could tumble in the coming months. To KBW's Meyer Shields, Warren Buffett's company might cut back on stock purchases and buybacks, and could see weaker consumer demand. That means betting against Buffett could pay off this year.
6. Dozens of vessels have made ship-to-ship transfers of Russian oil off the Greek coast and the crude continues to flow to Europe. A Nikkei Asia analysis found 41 ships delivered oil to European ports that originated from Russia. In the previous year, there was only one such vessel.
7. Germany is now generating nearly a third of its electricity from coal. Europe's largest economy is scrambling to replace Russian natural gas ahead of winter as prices soar and supplies are threatened. In the first six months of the year, German power plants have produced 17.2% more coal-powered electricity compared to 2021.
8. The US housing market is well-positioned to absorb a series of corrections as prices start to drop off. A new report broke down six reasons why you shouldn't fear a sweeping crash despite recent declines in price. Here's what you want to know.
9. The global strategy chief for $8 trillion Charles Schwab broke down why he expects stocks to finish strong in 2022. He explained how indexes can rally into year-end even as the housing market slows down — and shared the one type of company he's bullish on now.
Markets Insider
10. GameStop shares jumped as much as 11% Thursday after the video game store partnered with Sam Bankman-Fried's FTX. The news helped spark a rally for the meme stock, even after the retailer reported lower second-quarter sales. Get the full details here.
Keep up with the latest markets news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief from the Insider newsroom. Listen here.
Curated by Phil Rosen in New York. (Feedback or tips? Email prosen@insider.com or tweet @philrosenn).
Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.
from Business Insider https://ift.tt/pnA3EyM
No comments:
Post a Comment