Powell Sees Higher Peak for Interest Rates

MARKET MOVERS

• Fed Chair Powell Signals Potentially Faster Rate Hikes. Chair Jerome Powell said the Federal Reserve is likely to lift interest rates higher and potentially faster than previously anticipated with inflation persisting. The remarks opened the door to officials lifting the Fed’s benchmark lending rate by a half percentage point at the next meeting if upcoming reports on jobs and prices show rate hikes have done little to cool the economy.

• Salesforce Launches A.I. Sales Tools in Collaboration with OpenAI. Salesforce clients will be able to exchange Slack messages with a ChatGPT chatbot that can show data from Salesforce. Like Microsoft, Salesforce is emphasizing the ability for people to review information produced with AI and aid them in their profession.

• TikTok Debuts Paywalled 20-Minute Video Feature for Creators. TikTok announced another avenue for creators to monetize their videos on the short-form social media app. The new feature, called Series, will allow select creators to share longer videos that will be available for purchase behind a paywall. Creators will be able to select the cost of their paywalled content.

• Meta to Cut Thousands of Jobs in Further Streamlining Efforts. The world’s largest social networking company is eliminating more jobs, on top of a 13% reduction in November, in a bid to become a more efficient organization.* The company plans to cut thousands of employees as soon as this week.  The company has also been working to flatten its organization.

• 'Lock-In Effect' from Pandemic Limits New Home Listings this Spring. Black Knight data shows new listing volume down 25% in January compared to pre-pandemic levels. Two-thirds of homeowners with mortgages have rates that are 2.5 percentage points or more below what they could qualify for today, creating a “lock-in effect” that’s likely to keep many would-be sellers on the sidelines* this spring.

WHAT TO WATCH

• Biden Proposes Tax Increase for High Earners to Fund Medicare. The President's budget will propose hiking payroll taxes* on Americans making over $400,000 per year and allowing the government new power to negotiate drug prices as part of an effort the White House says will extend the solvency of a key Medicare program for another quarter century.

• JetBlue and Spirit Face Antitrust Lawsuit over Merger. The U.S. government’s antitrust regulators have seemed intent on stopping the merger from the outset. Under an agreement that binds the department’s review of the deal, the government would have to sue to block the transaction by Wednesday* or the deal can close.

• Deutsche Bank Downgrades Joby, Cites Risks to Electric Aircraft Stock. The electric-aircraft maker fell more than 4% after being downgraded to sell from hold* by Deutsche Bank. The Wall Street firm said the aircraft’s weight has raised questions and led him to wonder if the design is “overly aggressive.”

• Credit Suisse Predicts 100% Increase in Mineralys Stock. Mineralys gained about 3% after Credit Suisse initiated coverage of the stock with an outperform rating and $40 price target, which suggests an upside of more than 100%. The Wall Street firm said there is a large unmet need for resistant hypertension treatment and said Mineralys has “potential best-in-class” data.*

• Take-Two Interactive Stock Rises on Positive Gaming Merger News. There was some positive news on the buyout front when it was reported that the European Union appears willing to clear Microsoft's acquisition of Activision Blizzard. If the Microsoft/Activision Blizzard deal does go through, it could pave the way for other mergers in gaming. Take-Two Interactive would be a likely target.

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