Biggest Fed Hike in Decades

• 3 min read
Biggest Fed Hike in Decades

MARKET MOVERS

  • Fed raises rates by half a percentage point. It's the biggest hike in two decades. Along with the move higher in rates, the central bank indicated it will begin reducing asset holdings on its $9 trillion balance sheet. Starting June 1, the plan will see $30 billion of Treasurys and $17.5 billion on mortgage-backed securities roll-off. After three months, the cap for Treasurys will increase to $60 billion and $35 billion for mortgages. Read more here.

  • Oil prices rise on EU proposal to phase out Russian imports. EU Commission President Ursula von der Leyen presented lawmakers from the 27-member bloc with a proposal to phase out the supply of crude from Russia within six months and refined products by the end of the year. Meanwhile, OPEC meets this week to discuss the possibility of trying to raise output further.

  • U.S. Trade deficit widens to record $109.8 billion as imports surge. The Commerce Department on Wednesday said the trade deficit widened by 22.3% from the prior month. Imports rose by 10.3% to $351.5 billion as the U.S. took in far more goods than it exported. Exports, however, also rose strongly—increasing 5.6%—but didn’t keep pace with imports amid global uncertainty stemming from the conflict in Ukraine.

  • FAANG is dead. It's MANTA now. Veteran fund manager Mark Hawtin says the FAANG trade is dead as it reached a size and level of maturity, which means that they now move more in line with macro tailwinds and headwinds. MANTA — which comprises of Microsoft, Amazon, chipmaker Nvidia, electric vehicle manufacturer Tesla and Apple — could take its place instead, according to Hawtin. Read more here.

  • Airbnb’s earnings were strong as travel takes off. The short-term rental company reported a net loss of $18.8 million, or three cents a share, a stronger performance than the loss of 25 cents a share Wall Street analysts polled by FactSet were expecting. Revenue soared 70% year over year to $1.51 billion, while analysts had penciled in $1.45 billion. A recovery in travel during 2021 accelerated during the first quarter of 2022.

  • Uber revenue more than doubles as people ride more and keep ordering in. For the three months through March, the company said revenue grew more than twofold from a year earlier to $6.85 billion. Revenue was also helped by high ride prices, triggered by a yearlong driver shortage. Uber said growth is expected to continue this quarter. Rides booked in April exceeded 2019 levels and it expects around $28.5 billion for this quarter.

  • Secondary markets drove home price growth in Q1: NAR. The NAR report revealed buyers' search for cheaper housing-led booming home price growth in Florida and other smaller markets. Half of the leading markets are located in Florida while California claimed the prize for the highest median home prices. This is due to buyers looking for less expensive housing and also work-from-home opportunities, making relocation to smaller markets possible. Read more here.

  • Demand for AMD processors was much stronger than expected. In the first quarter, revenue increased by 71% year over year, while adjusted earnings per share more than doubled to $1.13. Both numbers crushed the consensus analyst estimates. Sales in AMD's computing and graphics segment grew 33% year over year, driven by strong demand for Ryzen and Radeon products. Read more here.

WHAT TO WATCH

  • Elon Musk plans to take Twitter public a few years after buyout. Mr. Musk said he plans to stage an initial public offering of Twitter in as little as three years of buying it. He has been speaking to investors such as private-equity firms to pay for the deal. Private-equity firms often take companies private with an eye toward fixing them up outside of the spotlight and then taking them public again within five years or so.

  • Tesla plans to build another plant in Shanghai, according to a report by The China Securities Journal. News that Tesla is building another plant is always a big deal for investors because they expect growth. Tesla might have picked Shanghai because of the success the company has there. The existing Shanghai plant is the company’s most productive, and its lower costs boosted the company’s profit margins when it came online. Read more here.
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