Weekly Good Reads: 5-1-1
Fed dilemma, emergency funding, get comfortable with uncertainty
Welcome to another issue of 5-1-1! I am Marianne O, writer of The Learner’s Mind on investing, economy, and wellness ideas. In this weekly, I will include 3 links to relevant economic and investment news, 1 link to finance, and 1 to wellness/idea pursuit based on what I read (5 links). I will also include 1 important chart and 1 investment term to know. You can easily subscribe to my newsletter by clicking below.
Market and Data Comments
Facing the biggest dilemma between calming inflation and navigating the ongoing financial system uncertainty, the U. S. Federal Reserve decided to stay the course and hiked rates by 25bp on March 22, taking the Fed Funds to a target range of 4.75% to 5%.
The Fed Chair, Jay Powell, however, seemed to indicate the end of the hike is coming albeit the interest rate will be held up for longer. The rapid decline of the 2-year U.S. government bond yield (from about 5% on March 8 to now 3.7%) shows the market believes interest rates will be cut this year.
Ex-FDIC vice chairman, Tom Hoenig, believed there could be more financial stress to come. Monetary tightening worked with a long and variable lag on both the economy and the financial markets based on the experiences of the 2008 financial crisis: witness the rapid takeover of the Credit Sussise by its rival UBS, brokered by the Swiss government.
Both companies and individuals need to brace for more credit tightening.
Yet, not all is gloomed. Global stocks (proxied by the MSCI All-Country Index) are still up by 3.45% YTD. Consensus (Factset) shows that first-quarter economic growth projections for the U.S., Eurozone, Canada, China, and Japan rose compared to the January estimates.
Economy and Investments:
Fed Stays the Course Amid Banking Turmoil (Statista).
How Deep is the Rot in America’s Banking System (Economist) (likely paywall).
Finance/Wealth:
Wellness:
How to Get Comfortable With Uncertainty and Change (Greater Good Science)
Bonus: 8 Ways to Apologize Well (Time) [good to share].
One Chart You Should Not Miss:
This is the amount the U.S. Federal Reserve has lent to the banks so far after the Silicon Valley Bank failed (signs of stabilizing).
One Term to Know: Money Market Fund.
U. S. banking deposits experienced a $98 billion outflow during the week to March 15 whereas the Money Market Fund assets surged by $121bn (like a mirror image.)
Please do not hesitate to get in touch if any questions!