Fed Minutes - Like waking up the morning of your last day on vacation, investors are far from ready for the fun to end. And that analogy isn't too much of a stretch, as the incredibly laid back stance of monetary policy over the last 20 or so months really has been a trip. Unfortunately, reality - aka the Federal Reserve - is ready to take us home.
On Wednesday, the minutes from the December Fed meeting dropped, shedding more light on just how exactly the Central Bank plans to tighten policy this year. Now, literally everyone already knew the basic premises including tapering, rate hikes, and balance sheet normalization, but as Wall Street does, investors still managed to be shocked by the obvious.
Fed officials basically said the same thing they've been saying since September. "We may need to ramp up the pace of our monetary policy tightening" is the fundamental idea. For some members, that means pulling the trigger on rate hikes as soon as the tapering process is over. Others are looking to begin unloading some of the Fed's historically high $8.7tn balance sheet. Some, it seems, are even willing to do both.
This sent tech stocks into a tizzy. While it's not that investors didn't know what was coming, I'm just not sure if they were fully mentally prepared for it, hence the Nasdaq falling over 3%. So yeah, nothing huge changed, but investor expectations are just about as important as actual policy implementations, largely because expectations for things like inflation become a self-fulfilling prophecy. The adjustment to expectations is a big deal, but it's child's play compared to what we'll get come March.
Leave Us Alone - We generally try to avoid the COVID stuff unless it's directly driving market movements (because the pandemic's gotta be ~90% of the content you get from other news sources), so you know it's getting wild if we're talking about it. All we can say for now is - wow.
Not to brag but the U.S. is officially number 1 again. Number 1, that is, in new confirmed cases of COVID-19 in a single day, reaching over 1 million this past Monday. If that's not wild enough for you, take a look around your local community and I can 100% guarantee that almost every store, school, or other place of work is struggling to meet staffing requirements as we speak.
It seems like every teacher in America has COVID. It has gotten to the point where districts are deciding to move online at the drop of a hat, prompting parents to scramble for child care and the other necessities of Zoom school. Other districts are combining classrooms or finding other solutions like having school administrators take on the role of substitute teachers. Anything to keep kids in school as long as they can.
I'm not sure why Omicron didn't get the message that we're just about over this whole pandemic thing, but honestly, it's getting annoying. Enough is enough, COVID, leave us alone.