Above the Fold

Fed Does Little to Quell Latest Taper Tantrum

The Federal Reserve, led by Chairman Jerome Powell, may have just left rates unchanged for the last time since slashing them back to near-zero in 2020. In its post-meeting statement, the Fed noted, “It will soon be appropriate to raise the target range for the federal-funds rate,” all but assuring we will see a small rate increase after its next meeting March 15-16. The board also removed a critical opening sentence from previous statements indicating it would aggressively support growth amid this unprecedented pandemic. 

Aside from long-lasting, above-trend inflationary pressures, the labor market is also signaling the end of easy money from the Fed. Wages have risen sharply and unemployment has tumbled from near 6% in June to under 4% in December, even amid a growing wave of resignations.  These two factors are, after all, the key mandates for the agency. 

Markets moved lower on what was certainly not a surprise to the vast majority of investors. But while we all expected yesterday’s Fed actions, there was still apparently some hope that the central bank would step in and offer up its powers to buoy recent selling in the stock market. Unfortunately, their actions, just like the bearish pressure we’ve seen in equities as of late, are both part of a normal evolution that we will have to adjust to. It’s important to remember that Washington and the Federal Reserve didn’t fully allow recessionary trends to take hold. Instead, they’ve fueled a parabolic extension of what was already a record expansion. And now, policymakers are reacting to market perversions they may have created in the first place.  

Three Things 

1. Meta Claims World’s Fastest AI Supercomputer – Meta, the company formerly known as Facebook, just announced it is building a new artificial intelligence (AI) supercomputer that will (according to CEO Mark Zuckerberg) be the most powerful in the world by mid-2022. The mega-machine boasts close to 6,100 Nvidia graphics processing units and is specifically designed to train machine learning systems. Put simply, this thing is designed to make the metaverse feel very, very real. Zuckerberg named it “RSC,” short for AI Research SuperCluster.
2. White House Sends New Message: “Zero Trust” – No, we’re not talking politics … the White House just released a new cybersecurity strategy across all its agencies, with the goal of adopting a “zero trust” architecture. As cyber-attacks mount, Washington leaders want to adopt a model where users and devices are only given permission to access network resources on an “as-needed,” temporary and case-by-case basis. The strategy also entails increased multi-factor authentication methods and a complete inventory of every device used for official business to be logged and monitored by the Cybersecurity and Infrastructure Security Agency (CISA).
3. Supply Chain Constraints and Online Shopping Are Destroying America’s Roads – As the country’s businesses and consumers adjust to massive changes in supply chains, living situations and shopping habits, prices aren’t the only thing doing damage. Large and small trucks are reportedly clogging highways and adding traffic and wear to smaller roads in areas not designed for it. The Wall Street Journal reported that the number of trucks on American roads and miles driven both hit records in a 12-month period ending in September 2021. The surge in online shopping is also driving the increase in medium and large truck traffic across the country, damaging roads and property, with costs likely to fall on the shoulders of taxpayers.

Did You Know? 

Let There Be (Incandescent) Light!

It was on this day in 1880 that Thomas Edison received his patent for the incandescent light bulb. Edison began work on this patent back in 1878, formally applying for an “Improvement in Electric Lights.” The original patent described several ways and materials that could be used to create light inside the bulb, but, ironically, none were really dependable. It wasn’t until months after the patent was granted that Edison and his team discovered that carbonized bamboo made an excellent filament, lasting for over 1,200 hours.