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Known as perhaps the most dovish Fed governor, Lael Brainard today spoke on inflation inequality — and joined the hawks at the Fed, saying its nearly $9 trillion in assets on the balance sheet should begin being drawn down in May “at a rapid pace.” This would effective in helping reduce inflation from its hottest levels in 40 years.
Brainard’s comments came just after 11am ET, but the markets didn’t go into an extended slide until after 1pm on the Dow and the S&P 500. However, both the Nasdaq and Russell 2000 — the worst-performing of the major indexes on the day — began selling off an hour or so after the opening bell.
So while the Dow fell -279 points, -0.80%, the S&P 500 shed -57 points, -1.25%. But the Nasdaq dropped -328 points, -2.26%, and the Russell lost -49 points, -2.36%. This is one of the biggest selling-off days of the year for the latter two indexes. For the Dow and S&P, they are both roughly -6% from their highs set early this year. The Nasdaq is currently -12% from its highs last November.
Back to Brainard’s comments, the Fed did draw down its most recent quantitative easing program at a rate of around $50 billion per month. Her comments today suggest the Fed may adopt a policy that begins to shrink the balance sheet by twice that much per month. She also backstopped Fed Chair Jay Powell’s assertion not long ago that the next Fed move — at its early May meeting — would hike interest rates by 50 basis points (bps), as opposed to the 25 bps it raised last month.
Both objectives are hawkish, and Brainard getting on board clearly suggest the dovishness is pretty well absent from the Fed, looking at current economic conditions. We see various inflation metrics growing at between 6-8% year over year, and many economists do not believe we’ve yet peaked out at the top of these inflation figures.
In other news, Spirit Airlines (SAVE - Free Report) has confirmed it has received an unsolicited bid from JetBlue (JBLU - Free Report) for $3.6 billion, or $33 per share. This sent SAVE shares up +22.5% on the day. However, Spirit had already fielded an offer from Frontier (ULCC - Free Report) for $2.9 billion. Though Spirit Air does not appear to have fostered it, there may now be a bidding war for the Zacks Rank #3 (Hold)-rated sotck.
Image: Shutterstock
Lael Brainard Turns Hawkish, Snags Indexes
Known as perhaps the most dovish Fed governor, Lael Brainard today spoke on inflation inequality — and joined the hawks at the Fed, saying its nearly $9 trillion in assets on the balance sheet should begin being drawn down in May “at a rapid pace.” This would effective in helping reduce inflation from its hottest levels in 40 years.
Brainard’s comments came just after 11am ET, but the markets didn’t go into an extended slide until after 1pm on the Dow and the S&P 500. However, both the Nasdaq and Russell 2000 — the worst-performing of the major indexes on the day — began selling off an hour or so after the opening bell.
So while the Dow fell -279 points, -0.80%, the S&P 500 shed -57 points, -1.25%. But the Nasdaq dropped -328 points, -2.26%, and the Russell lost -49 points, -2.36%. This is one of the biggest selling-off days of the year for the latter two indexes. For the Dow and S&P, they are both roughly -6% from their highs set early this year. The Nasdaq is currently -12% from its highs last November.
Back to Brainard’s comments, the Fed did draw down its most recent quantitative easing program at a rate of around $50 billion per month. Her comments today suggest the Fed may adopt a policy that begins to shrink the balance sheet by twice that much per month. She also backstopped Fed Chair Jay Powell’s assertion not long ago that the next Fed move — at its early May meeting — would hike interest rates by 50 basis points (bps), as opposed to the 25 bps it raised last month.
Both objectives are hawkish, and Brainard getting on board clearly suggest the dovishness is pretty well absent from the Fed, looking at current economic conditions. We see various inflation metrics growing at between 6-8% year over year, and many economists do not believe we’ve yet peaked out at the top of these inflation figures.
In other news, Spirit Airlines (SAVE - Free Report) has confirmed it has received an unsolicited bid from JetBlue (JBLU - Free Report) for $3.6 billion, or $33 per share. This sent SAVE shares up +22.5% on the day. However, Spirit had already fielded an offer from Frontier (ULCC - Free Report) for $2.9 billion. Though Spirit Air does not appear to have fostered it, there may now be a bidding war for the Zacks Rank #3 (Hold)-rated sotck.
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