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The Dow fell as much as 404 points. The Fed delivered a widely-anticipated 50 basis point rate hike at the conclusion of its December policy meeting. It's a smaller bump from the prior four consecutive rate hikes of 75 basis points. Fed officials also forecast raising rates through next year, not lowering rates until 2024. Treasury yields initially popped after the Fed rate hike, with the 2-year Treasury yield rising about 2 basis points to 4.253% as the central bank indicated further increases ahead.
The less aggressive stance - which followed better-than-expected consumer price data in October - fueled a bond rally over the past month. Fresh data on inflation will come with the release of the November Consumer Price Index on Tuesday, one day before the Fed's policy decision will be announced. Fed funds futures traders on Friday were pricing in a 93% probability of a 50 basis points rate hike this month, which would bring the Fed's policy rate to a 4.25%-4.5% range. As of September, Fed's policymakers saw the fed funds rate ending 2023 at 4.6%. Therefore, I have to believe that 10-year Treasury yields are probably too low," he said.
Fresh projections by Fed policymakers released after next week's meeting are expected to reflect that, along with a forecast for no cuts to the policy rate until 2024. Reuters GraphicsThat could feed into arguments that the economy and labor markets are poised to weaken next year, easing inflation pressures. And those drops came despite the Fed lifting its policy rate by three-quarters-of-a-percentage point, to 3.75%-4% in early November. Meanwhile, unemployment has stayed at a low 3.7%, below where Fed policymakers had thought it would be as tighter policy slowed the economy. Reuters GraphicsPart of the reason the Fed may be more comfortable with easing financial conditions now than in the summer is simply that the Fed has already raised interest rates by nearly 4 percentage points.
Don't be surprised if economic data coming out over the next week kicks off a rally into the end of the year and potentially 2023, according to Andrew Slimmon, Morgan Stanley Investment Management's senior portfolio manager. The key period of data releases begins Friday with the producer price index, followed by November's consumer price index and another likely rate hike from the Federal Reserve next week. "The last time those were released they all led to rallies in the stock market because we had better inflation prints," he said. Like many investors, Slimmon expects a downturn ahead, given the inverted yield curve, but does not anticipate the "big earnings collapse," or downturn, many people are predicting in the first quarter. This is in part due to the fact that many consumers have beefed up savings in recent years given the proximity of the most recent recession.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWatch CNBC's full interview with Morgan Stanley Senior Portfolio Manager Andrew SlimmonAndrew Slimmon, Morgan Stanley Investment Management senior portfolio manager, joins 'The Exchange' to discuss the resilience of earnings in Q1, a slowdown following the yield curve inversion and worthwhile stock investments.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailChina could be the asset class to own, says Morgan Stanley's Andrew SlimmonAndrew Slimmon, Morgan Stanley investment management senior portfolio manager, joins 'The Exchange' to discuss the resilience of earnings in the first quarter, a slowdown following the yield curve inversion and worthwhile stock investments.
Defaults on private loans, which have fallen steadily since the pandemic's height in 2020, are ticking up. Private credit, or private debt, are catch-all terms to describe privately negotiated loans outside the public debt markets. Private credit firms engage in what's known as direct lending, making these private loans to companies who turn to them instead of a traditional bank. Analysts and asset management executives say private debt has held up well in 2022 in the face of brutal stock and bond market volatility. 'Fighting for allocation'A challenge for private debt funds in the past decade has been a dearth of companies they can lend to.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailFixed income an alternative like it hasn't been in a while, says MS Investment Management's WeinsteinBrian Weinstein, Morgan Stanley Investment Management's head of fixed income, joins 'The Exchange' to discuss opportunity plays in fixed income.
LONDON, Nov 21 (Reuters) - Morgan Stanley Investment Management said on Monday it had launched a new $1 billion private equity strategy to invest in companies which will remove 1 gigaton of carbon dioxide emissions from the atmosphere by 2050 or prevent that amount entering the atmosphere. Through the 1GT strategy, MSIM will invest in private companies in North America and Europe, whose activities aim to collectively prevent or remove 1GT of emissions. Investments will focus on the mobility, power, sustainable food and agriculture sectors and circular economy and deliver both financial returns and positive environmental impact, MSIM said. MSIM said it would also tie some of the 1GT investment team's compensation to the emissions performance of underlying investments. MSIM said it has already deployed $600 million of capital to companies seeking to mitigate climate change since 2015.
"Global businesses have a voice and need to make their voice heard, that you prefer an integrated world, and not a fragmented world," Singapore's Education Minister Chan Chun Sing (pictured here in 2019) said. Bloomberg | Bloomberg | Getty Images"It's important to remember that a more interdependent world is a safer world. He cited Russia's war in Ukraine and the World Trade Organization dispute settlement crisis as some of the cracks in the system. "Global businesses have a voice and need to make their voice heard, that you prefer an integrated world, and not a fragmented world," Chan said. "World trade as a percent of GDP had in the past been going up very fast, which contributed to the very low rate of inflation.
At the same time, tech sector valuations remain well above the overall market, while analysts are dimming their profit outlooks for the group. That level, which is still above the 17 times earnings commanded by the S&P 500, is still too lofty for some investors. Still, some investors are considering increasing their positions in tech and megacap stocks if further evidence of easing inflation presents itself. Higher yields can weigh heavily on tech and growth stocks, whose valuations tend to be based heavily on future profits that are discounted more severely as yields go higher. The firm has been underweight large-cap tech and growth stocks, preferring small cap and value shares, Lip said.
Watch CNBC’s full interview with Morgan Stanley's Jim Caron
  + stars: | 2022-11-10 | by ( ) www.cnbc.com   time to read: 1 min
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWatch CNBC’s full interview with Morgan Stanley's Jim CaronJim Caron, Morgan Stanley Investment Management, joins 'Closing Bell' to discuss fixed income and the weaker than expected inflation read.
'Sweet spot' is 3-year bonds, says Morgan Stanley's Jim Caron
  + stars: | 2022-11-10 | by ( ) www.cnbc.com   time to read: 1 min
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via Email'Sweet spot' is 3-year bonds, says Morgan Stanley's Jim CaronJim Caron, Morgan Stanley Investment Management, joins 'Closing Bell' to discuss fixed income and the weaker than expected inflation read.
The market will rally into the year end, but it won't be led by mega-cap tech stocks, according to Morgan Stanley's Andrew Slimmon. He added that these Big Tech stocks "floated right through" the 2008 global financial crisis because they were still gaining market share. He noted that this time, the bounce has been led by value stocks, while growth stocks drove the summer rally. The outperformance in value stocks has been pretty broad, covering energy, financials and industrials, he said. "While early, we think it makes sense to begin to nibble on early-cycle stocks ... consumer discretionary names that have been crushed," Slimmon added.
The Fed raised its target fed funds rate Wednesday by 75 basis points, or three-quarters of a point, and said it would take into account the lagging impact of higher rates on the economy. In the futures market, traders bet the terminal rate for fed funds would reach 5.09% by May from just over 5% before the meeting. The terminal rate is the level at which the Fed is expected to stop raising interest rates. With Wednesday's hike, the fed funds target rate range is now 3.75% to 4%. Caron said the market is now projecting a rate above the Fed's median target for the terminal rate.
The Federal Reserve is expected to announce that it is raising its fed funds target rate range by three-quarters of a point. A basis point equals 0.01 of a percentage point. If the Fed decides to signal smaller hikes are coming, Fed Chairman Jerome Powell could be the messenger when he briefs the media at 2:30 p.m. The hike would be the fourth 75 basis point hike in a row. A basis point equals 0.01 of a percentage point.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWatch CNBC’s full interview with Morgan Stanley's Brian WeinsteinBrian Weinstein, Morgan Stanley Investment Management head of fixed income, joins 'The Exchange' to discuss how to play bonds as yields rise.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailFed needs to remain hawkish and then slow down, says Morgan Stanley's Brian WeinsteinBrian Weinstein, Morgan Stanley Investment Management head of fixed income, joins 'The Exchange' to discuss how to play bonds as yields rise.
The latest threat to stocks now isn't any macro risk — it's rising 2-year Treasury yields, according to some fund managers and strategists. Short-term, relatively risk-free Treasury bonds and funds are back in the spotlight as the yield on the 2-year Treasury continues to surge. Meanwhile, U.S.-listed short-term Treasury ETFs have attracted $7 billion of inflows so far in September — six times the volume of inflows last month, BlackRock said. Here's what analysts say about how to allocate your portfolio right now. This sees investors put 60% of their portfolio in stocks, and 40% bonds.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailPro Picks: Watch all of Friday's big stock calls on CNBCScott Nations of NationsShares, Tom Forte of D.A. Davidson, Joe Terranova of Virtus Investment Partners, Shannon Saccocia of SVB Private Bank, Michael Kantrowitz of Piper Sandler, and Andrew Slimmon of Morgan Stanley Investment Management on why they are buying, selling, or holding specific stocks and ETFs.
Watch CNBC's full interview with Morgan Stanley's Andrew Slimmon
  + stars: | 2022-09-23 | by ( ) www.cnbc.com   time to read: 1 min
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWatch CNBC's full interview with Morgan Stanley's Andrew SlimmonAndrew Slimmon, managing director and senior portfolio manager at Morgan Stanley Investment Management, joins 'The Exchange' to discuss 2-year notes increasing value as an alternative to stocks, the time to buy defensives, opportunities for P/E to lift, and the timeline until Fed easing.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via Email2-year notes growing as an alternative to stocks, says Morgan Stanley's Andrew SlimmonAndrew Slimmon, managing director and senior portfolio manager at Morgan Stanley Investment Management, joins 'The Exchange' to discuss 2-year notes increasing value as an alternative to stocks, the time to buy defensives, opportunities for P/E to lift, and the timeline until Fed easing.
Most of Shopify's C-suite has been replaced in the past two years. "There was some hope that they would reprioritize software, whether it's marketing-automation software or customer-engagement software," he added. The former chief technology officer Jean-Michel Lemieux, chief legal officer Joe Frasca, and chief talent officer Brittany Forsyth all departed in 2021. The chief product officer Craig Miller left the company a few months before that, in fall 2020. Shopify has yet to formally fill the chief product officer role, whose responsibilities Lütke said he would take on in the wake of Miller's departure.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThe Fed is in grave danger of being too hawkish, says JPMorgan's David KellyJim Caron, global fixed-income portfolio manager at Morgan Stanley Investment Management; David Kelly, chief global strategist at JPMorgan Asset Management; and Katie Nixon, chief investment officer at Northern Trust Wealth Management, join 'Power Lunch' to discuss Fed policy hikes, the rapid rise in the 2-year note, and the looming economic slowdown.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailI just don't think the economy can take a 4.25 to 4.5% rate, says JPM's David KellyJim Caron, global fixed-income portfolio manager at Morgan Stanley investment management, David Kelly, chief global strategist at JP Morgan asset management and Katie Nixon, chief investment officer at Northern Trust Wealth Management, join 'Power Lunch' to discuss the Fed announcement of a 75 basis point hike.
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