Jorden McVeagh, Editor

https://www.medicaleconomics.com/view/positioning-in-a-chaotic-stock-market-with-key-sectors

Stocks on the Asian market have declined as of Mon., November 14, 2022, while European and American stocks open higher due to the optimistic views on inflation in the US and virus cases spanning over China. Last week, US inflation reported at a lower rate than in the prior weeks which caught the attention of investors all over the world. They hope that this hints that the FED will rethink its plan to continue to raise interest rates to help fight rising inflation. However, industry workers such as Venkateswaran Lavanya of the Mizuho Bank believe this is not an accurate measure as to what is coming. In an article published by US News, Lavanya said, “It is far too hasty to declare a decisive conclusion to inflation risks.” Meaning, that reports can come in on a daily, but we cannot assess these as true indicators as to what the FED will do with interest rates in the future. This still did not stop the various markets from around the world from responding to this news. Exchanges such as the FTSE in London saw a 0.8% gain, the DAX in Frankfurt just behind them at a positive 0.7% gain, and Paris’s CAC 40 jumping 0.5%. However, not all markets responded in a way that would reflect this optimism. In the US, the S&P 500 dropped 0.2%, with the Dow Jones dropping 0.1%. These numbers still should not be looked at as a representative value for the entire US stock market. While the markets did see a slight drop, the S&P jumped 5.5% on Friday alone. This ends a great week for the US markets, which saw all three exchanges ending in the green. Last week was also a big week for the US political economy with the congressional elections being held, which found Republicans likely to take control of the House of Representatives, and the Democrats taking the Senate. In Asia, concerns of COVID are still high. The Nikkei 225 out of Tokyo dropped by 1.1% while the Hang Seng in Hong Kong went up 1.7%. With the news of the Chinese government making the decision to reduce the economic cost of their Zero COVID policy are primarily the reason behind the major shift of the markets. Finally, in Seoul, the Kospi dropped 0.3% with the S&P-ASX 200 following with a 0.2% drop. The FED will meet again in December once again to discuss interest rates. Investors expect another rate hike however this time only by half a percent in comparison to three fourths of a percent that was seen with the last four hikes. It will be interesting to see what the markets continue to do in the coming weeks leading up to the meeting. As talks of recession creep into the conversations in America more often, it may get worse before it gets better, but we will not know until more plays out in the coming weeks.

Jorden McVeagh, Editor

China has been a global superpower for many years now, and they are wanting to increase their global standing in a war of technology with the US. On Oct. 7^t, President Biden released a new set of regulations on China hindering their ability to purchase advanced microchips and the equipment necessary to make those chips without the proper licensing. The new set of regulations also restricts the US civilian from helping certain chip manufacturing facilities located in China in order to develop the chip. This has created a tech war between the United States and China, a war that Chinese leader Xi Jinping is eager and wanting to win. He believes that by doing so China will have officially arrived as a tech superpower on the global scale, and he believes that the new regulations are unfair and prevent China from taking the necessary steps in propelling their country to the next level. The United States has become a hub for chip manufacturing, and the rest of the world is almost dependent on the US and other countries in order to design, make, and fabricate the chips. The new regulations are hitting China in both the short- and long-term. While it restricts their ability to produce and gain access to chips as of now, the country will also be affected in the long run. Mark Williams and Zichun Huang, both analysts at Capital Economics, stated, “Chinese firms will lose access not only to advanced chips, but to technology and inputs that might over time have allowed domestic chipmakers to climb the ladder and compete at the cutting edge.” This goes to show how much the regulations placed by the Biden Administration will hurt the Chinese economy and tech industry in the future. There is little chance for true tech advancement, and they believe it will extremely hurt China’s chance at becoming the leading tech superpower in the world. The chips in question are an important component in the making of smartphones, self-driving cars and arms manufacturing. With this in mind, the US has made it public that the reasoning behind the regulations was to protect national security interests. As of 2025, Beijing has targeted for China to become a, if not the, global leader in a multitude of different industries, and the tech sector was not one left off the list. Pair this with leader Xi Jinping coming back for an unprecedented third term, and China may be on their way to achieving that benchmark. With the shipping industry struggling to get shipments across the oceans it will be interesting to see how this plays out for China. China will focus on achieving this domestically by creating a talent pool large enough that all their technological goals will be completed by their set deadlines. China has been a country threatening the US in terms of global supremacy for years now, and with the world shifting to a more technologically based world by the day, it will be interesting to see where the scales shift in the coming months and years.

Jorden McVeagh, Editor

https://www.nbcnews.com/news/us-news/rivian-recalling-nearly-vehicles-loose-fastener-concerns-rcna51319

On Oct. 7^th, 2022, Electric truck and SUV company Rivian Automotive announced that they would be recalling  all their vehicle lines as a result of a loose fastener. The recall will tighten said fastener in order for drivers to steer the vehicle without issue. Rivian, founded in 2009, will be recalling over 13,000 of their vehicles. The cause of the problem is a result of the front upper-control arm and steering knuckle not having enough torque. The company based out of Irvine, California, believes that it would only take a few minutes to make the fix and that all repairs should be completed within 30 days, assuming customers collaborate willingly. Rivian is trying to jump on the EV buzz and fix their problems now with the hopes the emerging consumers within the EV market will start to purchase their vehicles and grab a hold of the overall market share currently dominated by Tesla. The company has been public for little over a year and has already surpassed Ford and GM in market value making it the second most valuable automaker from the US behind Tesla. However, with the current economic conditions, the stock price does not reflect their prosperous first year being publicly traded as it has dropped 67% on the year thus far. Big news for the company came last month as they announced a partnership with Mercedes-Benz. The two companies will be building a factory in Europe that will produce electric vans for both companies to sell to the public. Even though Rivian has experienced success as of late, it has not come without its hardships. It started in March when the company announced price hikes on all vehicles which resulted in huge backlash from angry customers. Then in April, the company laid off over 800 workers after reporting a $1.6 billion net loss in the first quarter of 2022 alone.  Followed up by another poor second quarter where they posted a $1.7 billion net loss. Then as the old saying goes, “when it rains it pours.” Rivian has not been able to escape the global supply chain issues that have plagued the global economic environment. As a result, their factory stationed in Illinois can produce 150,000 vehicles per year on average. This year, the factory will be happy to produce 25,000. 

Jorden McVeagh, Editor

What do Rising Interest Rates Mean for Your Money? | Access Wealth 

This upcoming Wednesday Sept. 21, The Federal Reserve will meet to discuss the topic of raising interest rates once again. The past two meetings have resulted in two interest rate hikes which is significant since they haven’t raised rates since 2018. However, since March alone, the Fed’s benchmark policy rate has risen 2.25% and it stands to go up again after Wednesday’s meeting. After the meeting concludes interest rates once again will receive a bump of three quarters of a point which would bring rates to 3%. In addition, they also could raise rates by as much as an entire percentage point which would bring rates to 3.25%. All around Wall Street it is a back-and-forth discussion between whether or not people think the Fed will continue raising interest rates until November or if inflation will slow down so the central banks can relax for a little. 

Forecasts for the last quarter show that interest rates could rise to as high as 3.5-4% by November and jump up to 3.75-4.5% in December. When it comes to answering the question “do you think this will slow down anytime soon?” economists believe that there is still more to come in the future. Inflation is still rather high in comparison but has gone down over the past year. Before August, the national inflation rate sat at 8.52% with it now sitting at 8.26%. This is certainly moving in the right direction, but still up from last year’s closing rate of 5.25%.

Even though interest rates are still high, this still doesn’t mean the economy is struggling all around. The job market is sitting in an amazing position right now with an unemployment rate of 3.7% equaling 6 million people across the US without work. To put it into perspective, it is generally accepted that an unemployment rate between 4-5% is full employment. Full employment refers to the economic system where anyone who wants to and is able to work is employed. In addition, consumer spending is also still going strong. We are seeing consumer spending numbers at a higher level than it was during the COVID-19 pandemic period, it is still strong with consumers spending $1.392 trillion (USD) in the second quarter of 2022. This is up slightly from the $1.388 trillion that was spent in the first quarter of 2022. 

Finally, the housing market is still high even with the spike in interest rates in the past months. These rate hikes could prove to be costly in the long run though, as too many hikes could result in sending the US economy into a mild recession according to Chief Investment Officer at Girard Timothy Chubb. These hikes could also shift the stock market substantially in terms of market volatility. With interest rates still rather unpredictable, investors have no idea what forecasts for later in the year could look like. July 2023 forecasts have rates anywhere between 3.25-5% which would result in other central banks, such as the European Central Bank, to increase rates as well to keep the market in some sense of balance. If this were to happen it would make the markets that much more volatile making it harder to predict whether a stock price will go up or down based on other market occurrences.

While it is unknown what will happen this week and in the coming months, it will be interesting to see what happens and how it continues to impact the global economic environment. 

 

Jorden McVeagh, Editor

On Sunday Sept.4^th, Bed Bath and Beyond Chief Financial Officer Gustavo Arnal was found dead by New York City Police Officials. The former 52-year-old CFO was identified as deceased after it was found he threw himself off the balcony of his 18^th floor high-rise apartment. Arnal had joined the company at the peak of the COVID-19 pandemic in May 2020 after a successful career at companies such as Avon, Walgreens and Procter and Gamble. Arnal was instrumental in guiding triple B through the pandemic through his financial knowledge and his ability to create a strong collaborative culture around him. This news however comes at a terrible time for triple B as they creep closer to declaring bankruptcy. As of now, they are fighting this problem by downsizing.

 As of Wednesday Sept. 7, the company will be laying off 20% of their corporate employees, closing 150 stores, and reducing several in-house home good brands. In addition to this, $500 million has been saved up to help the company fight through the financial hardships they are facing at this time. Shifting the focus back on Gustavo Arnal, on Aug. 23, a lawsuit filed in the US District Court in DC naming Arnal as a defendant in a class action lawsuit. This case pinned him against Ryan Cohen, who accused the company and Arnal of pump and dump schemes to hyperinflate the company’s stock price. The contents of the lawsuit stated that Arnal and other company officials made misleading comments regarding the company’s current financial situation. Bed Bath and Beyond failed to communicate financial plans with investors, delayed stockholders from seeing their holdings and stock positions, and shared fake revenue numbers.

The company also introduced their “Buy Buy Baby” promotion for the purpose of increasing stock price. This promotion saw triple B acquire a privately held baby merchandising company for $67 million. This comes at a time of financial hardship for companies worldwide. It is worth noting that Ryan Cohen, the other side of the lawsuit against Arnal, sold his $178 million stake in the company. As a result of this sale, Bed Bath & Beyond stock (BBBY) dropped by a whopping 19.63%. On Aug. 18, the day Cohen sold his shares, Bed Bath and Beyond stock price dropped from $23.08 per share to $8.63 per share as of today. This was the beginning of the downfall for the company, and they have been fighting to stay afloat since. It will be interesting to see how Bed Bath and Beyond fights through this time and the financial standing of the company moving forward.