Weekly Market Update - 19 December 2022

Raising Rates

The Fed raised rates 50 basis points at Wednesday's meeting, as expected. Chair Jerome Powell says the central bank has more work to do to vanquish inflation but investors seem to see the outlook for 2023 differently. Policymakers projected rates would end next year at 5.1%, according to their median forecast, before dropping to 4.1% in 2024 — a higher level than previously indicated. The higher forecasts were not a surprise to MLIV Pulse Survey respondents, of whom 52% said they weren’t surprised by the ratcheting up of the rate estimates in the dot plot. Survey respondents also expected a stronger dollar and weaker stocks into the end of the year.

Source: Bloomberg

Musk Selling Shares

Elon Musk sold another $3.58 billion of Tesla shares, bringing the total amount he’s offloaded since late last year to almost $40 billion. The latest disposal coincided with Musk falling from the top spot in the Bloomberg Billionaires Index, a position he’d occupied since September last year. Still, others are buying Tesla -- a gamut of Cathie Wood’s Ark Investment Management funds scooped up nearly 75,000 shares this week.

Source: Bloomberg

Chinese Tech Blacklist

The US government is adding dozens of Chinese tech companies to a blacklist, ratcheting up a trade conflict between the world’s two largest economies. The Department of Commerce’s move means that anyone seeking to supply them with US technology will require a license from Washington — something that will likely be difficult to get. The US wants to limit the Chinese military’s access to advanced chipmaking and artificial intelligence technology.

Source: Bloomberg