Opening Bell: 5.13.22
Powell: ‘Soft’ economic landing may be out of Fed’s control [AP]
“The question whether we can execute a soft landing or not — it may actually depend on factors that we don’t control,” the Fed chair said. “There are huge events, geopolitical events going on around the world, that are going to play a very important role in the economy in the next year or so….”
On Thursday, he said that slowing inflation to the Fed’s 2% annual target — from its current 6.6%, according to the central bank’s preferred measure — “will also include some pain, but ultimately the most painful thing would be if we were to fail to deal with it and inflation were to get entrenched in the economy at high levels.”
Investors Face a World Where Stocks No Longer Reign [WSJ]
Investors are moving their money out of stocks and into ultrasafe assets that had largely been unloved for the past decade—such as cash, Treasury bills, certificates of deposit and money-market funds. Investors put $51.4 billion in global money-market funds in the week through April 27, the most for a week since October, according to Refinitiv Lipper. During the entire month of April they yanked $19.2 billion out of stock exchange-traded funds—the biggest outflows since 2019….
BofA Strategists Say Investor Exodus Signals ‘True Capitulation’ [Bloomberg]
“The definition of true capitulation is investors selling what they love,” Hartnett said, citing Apple, big tech, the dollar and private equity. The meltdown in cryptocurrencies and speculative tech now rivals the internet bubble crash and the global financial crisis, he said…. The benchmark S&P 500 is also flirting with bear market territory -- defined as a 20% drop from a record high -- and although BofA strategists said they expect a bounce in the short term, they still see room for stocks to fall further. “Fear and loathing suggest stocks are prone to an imminent bear market rally, but we do not think ultimate lows have been reached,” Hartnett wrote.
Federal Reserve Chair Jerome Powell confirmed by Senate for a second term [CNBC]
The Senate voted 80-19 to give Powell a second four-year run at the central bank’s helm, ending a long-delayed vote that has been stewing since President Joe Biden nominated the 69-year-old former investment banker back in November.
Robinhood shares pop more than 20% after Sam Bankman-Fried buys 7.6% stake [CNBC]
“The Reporting Persons intend to hold the Shares as an investment, and do not currently have any intention of taking any action toward changing or influencing the control of the Issuer,” it says. Though the filing also said he may “from time to time engage in discussions” with management…. Bankman-Fried currently has no intention to take other actions but at some point if circumstances change, he may review “options for enhancing stockholder value through, among other things, various strategic alternatives or operational or management initiatives,” according to the document. It also says he could acquire additional shares.
Pelham Hedge Fund Losses Worsen to Record 28% as Stocks Plunge [Bloomberg via Yahoo!]
The firm’s main Pelham Long/Short Fund plunged about 7% in April, worsening its loss this year to 28%, according to people with knowledge of the matter. That comes after a 12% decline in 2021…. It’s not clear what led to Pelham’s losses in April. The fund had declined by a record 18.5% in January, with the result driven entirely by its long positions.
