| | | | | | | Presented By Vinovest | | | | Axios Markets | | By Matt Phillips and Emily Peck · Nov 03, 2022 | | Hello! Yesterday's Fed statement sent markets for a loop. Here's how it went down. - Today's newsletter is 1,075 words, 4 minutes.
| | | | | | 1 big thing: Powell's mic drop |  Data: FactSet; Chart: Axios Visuals It wasn't quite a pivot, but investors were initially pleased to see the Fed's policy statement flick at the possibility that it could slow — or even pause — its rate hikes. Then came the presser, Matt writes. Driving the news: Markets whipsawed in the aftermath of another 0.75 percentage point rate hike yesterday — the sixth hike of the year. Stocks first rose on the statement, then flopped during and after Fed chair Jerome Powell's post-announcement press conference. The big picture: The rate hike wasn't the real news. - What first moved the markets was the bit of the Fed's monetary policy statement — released at 2pm ET — that hinted the bank may want to pause and assess how hard this year's series of fast, steep rate increases hit the economy, before carrying on.
- Context: The housing market, in particular, has been hard hit by the shock of 7% mortgage rates and has been weighing on economic growth.
What the statement said: "The Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments." - Stocks briefly climbed into positive territory, and short-term bond yields fell, suggesting investors interpreted the statement to mean the Fed could start to lighten up on rate hikes, sooner rather than later.
Yes, but: Then came the Fed's press conference — at 2:30pm — in which Powell pretty clearly quashed the idea that the central bank would pause rate hikes any time soon. - "It's very premature, in my view, to think about or be talking about pausing our rate hikes," Powell said. "We have a ways to go."
- That statement helped push bond yields sharply higher as investors reversed their previous bets on the possibility of a pivot or a pause.
- Stock markets, in turn, sank sharply, with the S&P 500 closing the day down 2.5% in its third consecutive decline.
The bottom line: The market wobbles might look like a roller coaster ride to nowhere. But that's kind of missing the point. - The Fed was able to raise the idea of a pivot — putting it on the market's radar — while not committing to any particular course of action.
- That's a nifty trick to pull off, and will make it easier to bring up the topic again if the bank actually needs to change course.
|     | | | | | | 2. Catch up quick | | 💰Adobe's $20 billion acquisition of Figma draws antitrust DOJ scrutiny. (Bloomberg) 🐦 Twitter plans to order workers back to the office after layoffs. (Axios) ⬇️ Morgan Stanley to start layoffs as dealmaking slows. (Reuters) | | | | | | | | 3. Shipping rates are down, but... |  Data: Freightos; Chart: Axios Visuals Shipping prices, one of the most visible signs of pandemic-era supply chain snarls, have tumbled — really tumbled, Axios' Kate Marino writes. Why it matters: Economists — and Fed chair Powell — have consistently pointed to supply chain problems as one of the culprits behind high inflation. - Yes, but: Inflation rates haven't come down all that much over the last several months, even as port backlogs have ebbed and shipping rates have returned to earth.
And that's something Powell is paying attention to. "As the supply side problems have resolved themselves, we would have expected goods inflation to come down by now — long since by now," he said at yesterday's press conference. - "It's come down, but not to the extent we had hoped," he added.
The bottom line: Powell said this shows how, "without question," the inflation picture "has become more and more challenging over the course of this year" — and that makes the potential path to a soft landing even narrower. | | | | | | | | A message from Vinovest | | How to invest in wine | | |  | | | | Vinovest pairs master sommeliers with thousands of data points to build you a robust investment portfolio of wines. What's in it for you: Fine wine has returned 10.6% per year over the past 30 years, outperforming the global equities market during the same span. Join 150,000+ users | | | | | | 4. Fed > midterms |  | | | Illustration: Annelise Capossela/Axios | | | | The midterms may be next week, but the markets are more focused on Fed policy, according to a pair of surveys commissioned by Natixis Investment Managers, Kate writes. The big picture: 70% of 300 U.S. financial advisers surveyed agreed with the statement "Election results are less important than Fed policy." - And in a separate survey of 34 investment managers, 88% said central bank policy is a significant markets driver, while just 6% said the midterms are.
The bottom line: Markets may have been paying closer attention to Powell yesterday than they will be to Steve Kornacki on Tuesday. | | | | |  | | | | If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. | | | | | | | | 5. How the LAPD had Moonves' back |  | | | Illustration: Sarah Grillo/Axios | | | | A captain in the Los Angeles Police Department tipped off former CBS chief executive Leslie Moonves after a woman filed a confidential criminal sexual assault complaint against him, and then helped him cover up the allegation, according to a report from New York Attorney General Letitia James released yesterday, Emily writes. Why it matters: Part of a multimillion-dollar settlement agreement with Moonves and the network, now part of Paramount, the report offers a clear picture of the culture of corruption a powerful corporate leader can foster — when the police, industry strivers and board rooms work to protect them. - It also underscores the uphill battle women face in reporting misconduct about such well-protected men and how extraordinary the #MeToo movement was.
- The report notes that neither CBS nor Moonves "admit nor deny" its findings.
Moonves was ultimately felled by multiple reports of sexual harassment published in the New Yorker and the New York Times, resigning in 2018. Details: The LAPD captain alerted one of the CEO's staffers in November 2017 of a woman's confidential complaint, according to the NY AG's office. - The police officer kept in touch with Moonves' team, at one point texting Moonves' personal attorney to say that the investigating officer on the case would "admonish" the accuser about going to the media.
- "You will be the first and only point of contact regarding [t]he investigation," he wrote the attorney.
- Meanwhile, accusations from a second accuser were silenced by a talent agent eager to get in Moonves' graces, the report shows.
The AG's report also details an internal "investigation" by an attorney hired by CBS. - It "consisted only of a single 20-minute telephone call with Moonves and a request for Moonves' human resources file. The M&A Attorney interviewed no other persons, collected no additional documents, and reviewed none of Moonves' electronic communications."
The AG announced that Moonves would have to pay $2.5 million to CBS shareholders, and for five years can't serve as an officer or director of a public company without approval from the AG. 💭 Emily's thought bubble: That someone like Moonves was held to account is remarkable in hindsight, now that the frenzied reporting atmosphere of 2018 is in the rearview. Read the full story. | | | | | | | | A message from Vinovest | | Outperforming the stock market | | |  | | | | Scarcity, aging and brand equity drive wine prices up over time, making it an ideal investment for the good times — and the not so good times. What you need to know: Wine outperformed the Global Equity Index 1.88% annually over the past 15 years. Start investing in wines picked for maximized returns. | | | | 🏃♀️1 thing Emily loves: Running. Well, at my pace it's more aptly called jogging. Still, even going slow, I love to get out on the roads around my neighborhood — I usually spot some cool birds or wildlife. Once, a giant turtle. Often a bunch (herd?) of deer. Yesterday, I saw a heron just… flying around. Plus, it's good to focus my eyes on the trees instead of a keyboard. Oh, and it's one of the cheapest ways to get a workout. Readers, do you run? What do you do when you want to get away from your screen or get some exercise? You can reply to this email and tell us. |  | | Why stop here? Let's go Pro. | | | | | | Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here.
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