“The S&P 500 is on track for its worst first-half performance since 1970, down nearly 20% this year,” the Wall Street Journal reports.
Wall Street Journal: “U.S. public pension funds don’t have nearly enough money to pay for all their obligations to future retirees. A growing number are adopting a risky solution: investing borrowed money. As both stock and bond markets struggle, it’s a precarious gamble.”
“You can look but you won’t find a stretch of futility as pervasive as the one that is landing on Wall Street,” Bloomberg reports.
“Even in the long and storied history of market meltdowns, the breadth of losses is without equal, based on data that goes back to the Great Depression. In five of the seven sessions through Thursday, at least nine in 10 S&P 500 stocks dropped, a record run of widespread losses.”
Bloomberg: The next crisis to hit markets may be about liquidity.
“The price of bitcoin lurched below $20,000, and below a level widely monitored by cryptocurrency enthusiasts, as a brutal selloff in crypto showed no signs of abating,” the Wall Street Journal reports.
“The Federal Reserve approved the largest interest rate increase since 1994 and signaled it would continue lifting rates this year at the most rapid pace in decades as it races to slow the economy and combat inflation that is running at a 40-year high,” the Wall Street Journal reports.
Vox: Stopping inflation is going to hurt.
“The Federal Reserve is expected Wednesday afternoon to announce its largest interest rate hike since 1994 — a bigger increase than it had previously signaled and a sign that the central bank is struggling to restrain stubbornly high inflation,” the AP reports.
“The Federal Reserve’s missteps in waiting too long to tackle the greatest run-up in prices in four decades has shaken trust across markets and the American public that it is up to the task of curbing inflation,” the Washington Post reports.
“On the eve of a high-stakes Fed policy announcement, investors, economists and policymakers were on edge over how sharply the Fed would raise interest rates to deal with inflation, which hit a new peak in May.”
“Financial market volatility and losses deepened on Tuesday, fueled by fears that the Fed continues to misjudge inflation and will come down too hard on the economy, prompting a recession. The S&P 500 has fallen into bear market territory — a 20 percent fall from the most recent high — and all the indexes have accelerated losses for the year.”
“The 2022 stock sell-off intensified on Monday with the S&P 500 tumbling to a fresh low for the year and closing in bear market territory as recession fears grew ahead of this week’s key Federal Reserve meeting,” CNBC reports.
Wall Street Journal: “Meanwhile, a rout in cryptocurrencies highlighted investors’ increasing unwillingness to hang on to their most speculative holdings.”
“A string of troubling inflation reports in recent days is likely to lead Federal Reserve officials to consider surprising markets with a larger-than-expected 0.75-percentage-point interest rate increase at their meeting this week,” the Wall Street Journal reports.
“Federal Reserve officials agreed at their last meeting that the central bank needed to move ‘expeditiously’ to bring down the most rapid pace of inflation in 40 years, with most participants expecting as many as three half-a-percentage point interest rate increases in the months ahead,” the New York Times reports.
“Stocks dropped on Friday, pushing the S&P 500 into a bear market for the first time since early in the pandemic, as investors feared the effects of higher inflation, rising interest rates and the risk of a recession,” the New York Times reports.
“The S&P 500 was down about 1.6 percent in intraday trading, pushing the benchmark index into bear market territory, a Wall Street term for a 20 percent decline from a recent peak — in this case, since Jan. 3.”
“Stock futures slid, pointing to deeper losses for U.S. markets on growing worries of an economic slowdown,” the Wall Street Journal reports.
“Federal Reserve Chair Jerome Powell emphasized his resolve to get inflation down, saying Tuesday he will back interest rate increases until prices start falling back toward a healthy level,” CNBC reports.
Nicholas Weaver: “So the stock market and the bond market are a positive-sum game. There are more winners than losers. Cryptocurrency starts with zero-sum. So it starts with a world where there can be no more winning than losing. We have systems like this. It’s called the horse track. It’s called the casino. Cryptocurrency investing is really provably gambling in an economic sense. And then there’s designs where those power bills have to get paid somewhere. So instead of zero-sum, it becomes deeply negative-sum.”
“Effectively, then, the economic analogies are gambling and a Ponzi scheme. Because the profits that are given to the early investors are literally taken from the later investors. This is why I call the space overall, a ‘self-assembled’ Ponzi scheme. There’s been no intent to make a Ponzi scheme. But due to its nature, that is the only thing it can be.”
John Gruber: “There just isn’t any there there other than burning an unconscionable amount of electricity.”
“Traders’ flight from risky investments has halved the price of bitcoin and other cryptocurrencies, wiping out more than $1 trillion worth of digital money since November,” the Wall Street Journal reports.
“Wild swings are fairly common with cryptocurrencies, but even seasoned investors were left reeling as bitcoin dropped 29% over a seven-day losing streak that just ended as a stablecoin—one part of the crypto world that touted its stability—unexpectedly crashed.”
“The Senate confirmed Federal Reserve Chairman Jerome Powell to a second four-year term that is shaping up to be every bit as trying as his first term as the central bank faces the highest inflation in 40 years,” the Wall Street Journal reports.
“Mr. Powell’s nomination, approved Thursday on an 80-19 bipartisan vote, has been on track for months to win bipartisan approval despite unease over inflation and aggressive interest-rate increases that the Fed has urgently commenced to cool price pressures.”
“The Salvadoran experiment to make bitcoin legal currency has hit a wall,” El Pais reports.
“As a result of the fall in global markets caused by the uncertainty of the war in Ukraine, rising inflation and the US Federal Reserve’s decision to raise interest rates, the price of the most popular cryptocurrency in the world has plummeted more than 50% from its all-time highs. And with it, so too have the bonds of the government of El Salvador, which are trading at 40% of their original value, as investors start to doubt whether the country can meet its next debt payment.”
“Some Federal Reserve officials have begun to acknowledge that they were too slow to respond to rapid inflation last year, a delay that is forcing them to constrain the economy more abruptly now — and one that could hold lessons for the policy path ahead,” the New York Times reports.
“Inflation began to accelerate last spring, but Fed policymakers and most private-sector forecasters initially thought price gains would quickly fade. It became clear in early fall that fast inflation was proving to be more lasting — but the Fed pivoted toward rapidly removing policy support only in late November and did not raise rates until March.”
Wall Street Journal: Senate confirms Lisa Cook to Federal Reserve Board.