Federal Reserve officials at their meeting earlier this month concluded it would soon be appropriate to slow the pace of rate increases, signaling the U.S. central bank was leaning toward downshifting to a 50 basis-point hike in December.
“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” according to minutes from their Nov. 1-2 gathering released Wednesday in Washington.
At the same time, “various” officials concluded that “the ultimate level of the federal funds rate that would be necessary to achieve the committee’s goals was somewhat higher than they had previously expected.”
U.S. stocks and Treasuries rallied while the dollar fell following the report, as investors took a dovish message from the minutes.
At the meeting, officials raised the benchmark rate 75 basis points for a fourth straight time to 3.75 per cent to 4 per cent, extending the most aggressive tightening campaign since the 1980s to combat inflation at a 40-year high.
Officials discussed the effects of lags in monetary policy and the effects on the economy and inflation, and how soon cumulative tightening would begin to impact spending and hiring. A number of Fed officials said a slower pace of rate increases would allow the central bankers to judge progress on their goals.
“The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited regarding why such an assessment was important,” the minutes said.
The Fed said in its policy statement that rates would continue rising to a “sufficiently restrictive” level, while taking account of cumulative tightening and policy lags.
Chair Jerome Powell explained in a post-meeting press conference that rates will ultimately go higher than officials expected when they submitted forecasts in September, while signaling the pace of increases would moderate going forward.
Several officials since then have backed downshifting to a 50 basis-point increase when they gather next month. Investors see things the same way, while betting that rates will peak around 5 per cent by mid-2023, according to futures contracts.
Powell has a chance to influence those expectations in a speech in Washington scheduled for Nov. 30.
Officials in September saw rates reaching 4.4 per cent by the end of this year and 4.6 per cent in 2023. They will update those quarterly forecasts at their Dec. 13-14 meeting.
Since the November gathering, economic data have shown moderate growth with some signs of slowing inflation amid still strong demand for labor. Employers added 261,000 jobs last month and the unemployment rate rose slightly to 3.7 per cent, though it remains very low on a historic basis.
Financial conditions have also eased since the early November rate increase. Yields on government 10-year notes have declined about 30 basis points while U.S. equity markets have advanced.
DoorDash laying off 1,250 people, about 6% of its workforce – CBC News
DoorDash Inc. said on Wednesday it was cutting about 1,250 jobs, or six per cent of its total workforce, as the food-delivery company looks to keep a lid on costs to cope with a slowdown in demand.
DoorDash went on a hiring spree to cater to a flood of orders from people stuck at home during the height of the pandemic, but a sudden drop in demand from inflation-wary customers has left the company grappling with ballooning costs.
“We were not as rigorous as we should have been in managing our team growth … That’s on me. As a result, operating expenses grew quickly,” chief executive Tony Xu said in a memo to employees that was posted on the company’s website.
“Given how quickly we hired, our operating expenses — if left unabated — would continue to outgrow our revenue.”
DoorDash has about 20,000 employees worldwide, and “some of the affected employees are based in Canada,” the company told CBC News in a statement, without elaborating.
The company joins a growing list of technology firms, including Amazon, Facebook-owner Meta, Twitter, Shopify and others that have laid off thousands of employees in recent weeks as they brace for a potential economic downturn.
British food delivery company Deliveroo said in late October that sales growth would be at the lower end of its previous forecast. In September, Winnipeg-based food delivery app SkipTheDishes laid off 350 workers.
Earlier this month, DoorDash reported a bigger-than-expected quarterly net loss of $295 million US, raising questions about the growth prospect of delivery firms as economies reopen. The company’s shares have lost two thirds of their value this year.
“Greater emphasis on its cost structure is a welcoming sign, especially given the potential for consumer spending to deteriorate faster than expected,” said Angelo Zino, analyst at CFRA Research.
'I didn't ever try to commit fraud on anyone,' FTX founder Sam Bankman-Fried says – CBC News
The man at the centre of collapsed cryptocurrency exchange FTX made his first public appearance since the saga began, telling a New York audience on Wednesday that it was never his intention to commit fraud.
Sam Bankman-Fried, the 30-year-old founder of FTX, appeared at the New York Times’ Dealbook Summit on Wednesday, for an interview with journalist Andrew Ross Sorkin about what happened to cause his cryptocurrency firm to collapse into bankruptcy earlier this month.
The firm, once worth more than $32 billion US, entered bankruptcy protection on Nov. 11 after a whirlwind series of days that saw it go from trying to solve a liquidity crunch by merging with a rival, to having that deal fall apart and succumbing to a run on the bank as traders pulled out $6 billion in funds within three days.
Filings show the company owes almost $10 billion to various creditors, and at least $1 billion worth of customer deposits are missing.
Among numerous allegations, customer deposits at FTX appear to have been used as capital and collateral for loans for an investment firm called Alameda affiliated with him — an allegation that amounts to fraud, and one that he pushed back against strongly.
“I didn’t ever try to commit fraud on anyone,” he told Sorkin, “I didn’t knowingly co-mingle funds.”
While he acknowledged mistakes were made, Bankman-Fried rejected repeated attempts to characterize what happened at his cryptocurrency firm as being in any way malicious or illegal.
“I am deeply sorry about what happened,” he said. “I was excited about the prospects of FTX a month ago, I saw it as a thriving, growing business.”
Bankman-Fried has seen his personal net worth evaporate in the debacle, from more than $26 billion a year ago to “close to nothing” today — and he insisted that he doesn’t have any of the money that has vanished.
“I don’t have any hidden funds here. Everything I have, I am disclosing,” he said.
“I’m down to one working credit card … [and] hundreds of dollars or something like that, in a bank account.”
He says, to his knowledge, there are enough funds at FTX to give users their money. But his hands are tied since he no longer has a formal role at the company since it entered bankruptcy proceedings.
“I believe that withdrawals could be opened up today and everyone could be made whole,” he said.
John Jay Ray III, the restructuring expert who has been handling FTX’s bankruptcy proceedings has said in legal filings that Bankman-Fried appears to have treated the company as his “personal fiefdom” and has called the fiasco a “complete failure of corporate controls.”
Bankman-Fried has been active on Twitter since the debacle first started, but his appearance on Wednesday marks his first public appearance since the saga began.
There was speculation he was going to appear in person, but ultimately he appeared via video link from the Bahamas, where he lives.
Sorkin asked Bankman-Fried if he did not appear in person because he is worried about being within the reach of U.S. agencies including the Department of Justice and the Securities and Exchange Commission, both of which are probing what happened at FTX.
Bankman-Fried appeared to side-step that question, remarking instead that, to his knowledge, he can still legally enter the U.S.
“I’ve seen a lot of the hearings that have been happening [and] would not be surprised if some time I am out there talking about what happened,” he said, adding that he “does not personally think” he has any criminal liability to worry about.
That being said, he said his legal team is “very much not” supportive of his decision to appear at the summit and speak publicly about what happened at FTX. His lawyers advice was “to recede into a hole,” he joked.
Investors focus on Powell's comments which put gold back into rally mode – Kitco NEWS
Today gold futures are trading solidly higher as market participants react to Chairman Jerome Powell’s speech at the Hutchings Center on Fiscal and Monetary Policy, held at the Brookings Institution in Washington. Market participants focused intently on his remarks which alluded to a dynamic change in the Federal Reserve’s monetary policy.
“Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down … The time for moderating the pace of rate increases may come as soon as the December meeting.”
However, it must be noted that the reaction by investors at large seems to focus on what they had hoped to hear which is the Fed will begin to raise rates at a slower pace rather than his nuanced message that the time required for the Federal Reserve to achieve their goal will take much longer.
“It is likely that restoring price stability will require holding policy at a restrictive level for some time … History cautions strongly against prematurely loosening policy. We will stay the course until the job is done.”
As of 6:16 PM EST gold futures basis of the most active February, 2023 Comex contract is fixed at $1784.60 After factoring in today’s double-digit advance comprised of dollar weakness, buyers in the market along with the rollover from the December to February contract month.
Chairman Powell’s speech today diminished the concern of investors as they reacted to other members of the Federal Reserve who have been extremely vocal about upcoming interest rate hikes. Specifically, recent remarks by James Bullard underscored the hawkish intent of the Federal Reserve. Last week he commented on the need for the Federal Reserve’s benchmark rate to go as high as 7% to deal with inflation. This week he said that “the Federal Reserve will likely need to keep its benchmark policy rate north of 5% for most of 2023 and into 2024 to succeed in taming inflation.”
Chairman Powell’s statements were not in conflict in any way with those made earlier by James Bullard and other members of the Federal Reserve in his prepared speech. However, the chairman was able to deliver this message in a much softer tone. Chairman Powell in essence cemented a 50-basis point rate hike at the December FOMC meeting. However, he stressed that slowing the pace of rate hikes would require that the Fed maintains a restrictive monetary policy for a longer period.
Gold’s recent rally from $1621 to just shy of $1800 is a reflection of a major change in the market sentiment of investors. It suggests that investors are focusing intently on inflation and that lowering inflation to restore price stability will be a multi-year process.
For those who would like more information simply use this link.
Wishing you as always good trading,
In The News for Dec. 1: Canada gains on U.S. in permanent resident race – EverythingGP
Canada coach John Herdman disputes Croatian counterpart's account of skipped post-match handshake – The Globe and Mail
DoorDash laying off 1,250 people, about 6% of its workforce – CBC News
Silver investment demand jumped 12% in 2019
Iran anticipates renewed protests amid social media shutdown
Search for life on Mars accelerates as new bodies of water found below planet’s surface
Investment18 hours ago
Clinton Orr, Canaccord Genuity, earns Canada’s Top Wealth Advisor award
Sports20 hours ago
Protester with rainbow flag banned from World Cup matches
Science21 hours ago
In Somalia Meteorite, Scientists Discover 2 Minerals Never-Before-Seen On Earth
Business21 hours ago
Oil Prices Jump On Major Crude Draw
News15 hours ago
Educated immigrants face underemployment as Canada leads G7 in educated workforce
Real eState22 hours ago
Real estate industry braces for foreign buyer ban
Investment22 hours ago
Foreign investment in Latin America still below pre-pandemic levels
Tech21 hours ago
Xiaomi 13 Pro camera detailed with a 1-inch main sensor, floating telephoto lens