Get up to speed with what's moving markets
Good morning. Powell seeks to reassure lawmakers and investors, France’s economic recovery is on track, crypto investments are a threat, and Johnson’s moment of peril. Here’s what’s moving markets.
Federal Reserve Chair Jerome Powell sought to reassure lawmakers and investors on Tuesday that the central bank can pull off the tricky task of bringing down four-decade high inflation without damaging the U.S. economy. The S&P 500 a five-day slide, the Nasdaq 100 outperformed major benchmarks and the dollar fell. Euro Stoxx 50 futures are rising this morning.
registered a new record number of daily Covid-19 infections, as the omicron variant continued its fast-paced spread across the country. Still, the euro area’s second-largest economic recovery is proving almost immune to disruption from the wave of infections and is set to get extra support as supply constraints start to ease. That’s a source of reassurance for policy makers who have said European economies will be increasingly resilient to problems on the public health front.
Investments tied to cryptocurrencies and digital assets are by far the biggest threats facing individual investors in 2022, according to an annual survey of securities regulators by the North American Securities Administrators Association. Separately, Kim Kardashian and Floyd Mayweather Jr. were sued for allegedly scamming investors in a cryptocurrency called EthereumMax.
Worst Possible Time
Conservative MPs are watching Boris Johnson stonewall over allegations of pandemic rule-breaking parties at his office with horror -- and a degree of gallows humor. Opposition politicians have called for the U.K. leader’s resignation over the latest claims, but it is the reaction of his own Tories that will be of most concern to the prime minister — one Conservative MP described the mood as sulfurous, while another predicted the end of the road for Johnson. It’s a significant moment of peril at the worst possible time for Johnson, who had hoped to begin 2022 with a reset.
U.S. CPI data due today is expected to show prices rose 7% in December, the most since 1982. Sainsbury, Ferrexpo, JD Sports, Just Eat Takeaway and TeamViewer are just some of the firms in Europe giving sales updates. The EIA’s weekly crude oil inventory report and the USDA World Agricultural Supply and Demand Estimates round out the day’s highlights.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- This gaming hub is on the brink
- 50 companies to watch in 2022
- Rivalries cool but leverage shifts
- Trump, Twitter, and elections
- Why Sony is making more PS4s
- Djokovic’s ‘error of judgment
- Bruce Willis movie villain's ESG
And finally, here's what Cormac is interested in this morning
Global value shares are once again in the ascendancy but it may be too late for an investment strategy which has seen more false dawns than an Arctic seal. Cheaper economically-sensitive stocks have outperformed their growth counterparts this year -- most notably in Europe -- as traders bet higher bond yields reflect better prospects for growth rather than out-of-control inflation. But if value shares are winning now, why didn't they outperform from the pandemic lows, when wagers on an economic recovery first ignited and fiscal and monetary policy combined to juice growth. Since then, only emerging-market value shares have bested their growth peers. The basic argument of value bulls has remained the same -- leverage to an economic recovery -- only this time we are closer to the time when policy makers pull away the easy money punchbowl. While a value rotation could well have legs if interest rate rises are gradual, faster-than-expected hikes risk choking off the economic growth the strategy depends on. That means a bet on value is as much a wager on the abilities of central bankers to successfully manage the next rate cycle as it is on the shares themselves.
Cormac Mullen is a Deputy Managing Editor in the Markets team for Bloomberg News in Tokyo.
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— With assistance by Cormac Mullen, and Gearoid Reidy