On The Money – Stocks and cryptocurrencies are crashing

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Stocks and cryptocurrencies are hammered ahead of the Federal Reserve’s planned rate hike announcement. We’ll also examine the White House’s consideration of a gas tax waiver and explore why President Biden’s bet on an economic recovery may have backfired.

But first, see which celebrity chef is opening a restaurant in Trump’s former hotel in Washington, DC.

welcome to money, your nightly guide to everything related to your bills, bank account, and bottom line. For The Hill, we are Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Did someone forward this newsletter to you? Subscribe here.

Stocks enter the bear market

Stocks continued a massive sell-off on Monday that began last week following news that inflation had hit a 40-year high and had yet to bottom despite a monetary tightening program launched by the Federal Reserve.

The S&P 500 fell 3.87% on Monday to 3,749 from 3,900. This marks a move towards a bear market for one of the major US stock indices, having fallen more than 20% since its recent high of 4 796 in January.

  • In the two trading days since Friday, the index has fallen more than 6.5% from 4,017.
  • The Dow Jones Industrial Average for major U.S. companies fell 2.79% on Monday to 30,518 from 31,459. The index is down about 17% from its January peak. The Russell 2000 Index of small US stocks fell more than 4.9% on Monday, having already entered bearish territory with a fall of nearly 25% since the start of the year.
  • The bond market also saw a selloff on Monday that pushed yields higher and which analysts equated with a full-fledged Federal Reserve rate hike. The two-year US Treasury note rose 27 basis points to nearly 3.34%, with the 10-year note jumping a similar 22 basis points to offer a yield of 3.37%.

The context: With the two-year yield exceeding the yield on the 10-year note, the bond market experienced a “reversal” that is widely seen as a harbinger of recession. The 30-year Treasury note jumped 0.17% to yield around 3.36%, slightly more stable than its short-term counterparts which are more sensitive to interest rate movements.

These rates are expected to rise further this week after a meeting of the Fed’s Federal Open Markets Committee on Tuesday and Wednesday. The committee has signaled that it will continue to raise rates by 50 basis points at its next meetings, although there is speculation that a 75 basis point hike could be on the cards.

Tobias Burns of The Hill has more here.

CRYPTO CRASH

Warning signs are flashing for the crypto industry

The latest cryptocurrency selloff reveals signs of trouble for the crypto industry, which was already facing layoffs and a hiring freeze amid a global economic slowdown.

Bitcoin plunged nearly 23% from Friday to Monday, hitting its lowest level since late last year. Ethereum, the second most popular cryptocurrency, fell 32% over the same period. The total crypto market cap fell below $1 trillion for the first time since January as investors unloaded their digital coins.

“Granted, if you are a crypto middleman, you are looking at dark, gloomy days here. It’s not like the stock market where there’s a long-term history of rising prices,” said Lee Reiners, executive director of Duke University’s Global Financial Markets Center.

“Maybe that’s it, frankly,” he added. “This could be the beginning of the end for cryptocurrency.”

  • Bitcoin’s rout accelerated after crypto lender Celsius Network announced it would prevent customers from withdrawing or transferring digital assets to “stabilize liquidity” in “extreme market conditions,” a move that sparked outrage among users.
  • Monday’s slump coincided with a stock market selloff, indicating that investor fears of soaring inflation and rising interest rates are hitting crypto just as hard, if not harder, than stocks. high risk.
  • This could spell trouble for crypto companies that have grown exponentially over the past few years but are already starting to downsize due to falling crypto prices. Crypto.com and Gemini recently announced layoffs, while Coinbase suspended all hiring.

Karl has more here.

OFFICIALS CONSIDERING A HOLIDAY GASOLINE TAXES

White House takes fresh look at federal gas tax exemption

The White House is showing signs that it is considering a federal gas tax exemption more seriously, sources told The Hill.

President Biden’s economic team recently discussed the gas tax exemption and is expected to meet later this week for further discussions.

  • The White House is under political pressure to do something to provide relief to Americans facing high inflation and rising gas prices. The economic storm has created serious headwinds for Democrats ahead of the midterm elections, where the party worries about a bombardment.
  • Suspending the federal gas tax would require an act of Congress, but a public push from Biden for the policy could help spur action on Capitol Hill.

Check out more of Amie Parnes and Morgan Chalfant from The Hill here.

TOO HOT TO HANDLE

Why Biden’s bet on a quick economic rebound may have failed
President Biden’s bet on a quick rebound from the coronavirus recession may have failed.

  • The president and his top economic officials rallied Democrats around a $1.9 trillion stimulus bill in March 2021, urging Congress not to repeat the mistakes of the Great Recession and cut the economic support.
  • The bill was also Biden’s way of delivering on the promise made in Georgia’s deciding Senate runoff, which gave his party a narrow majority in the Senate: to elect Democrats and secure another round of stimulus checks.

Just over a year after Biden signed the bill, the US unemployment rate is near pre-pandemic levels, the economy has created more than 10 million jobs and gross domestic product is down. far higher than it was when COVID-19 shattered the economy. By these measures alone, the recovery under his leadership has been far stronger than the painfully slow exit from the Great Recession.

But despite the rapid rebound, Biden’s approval rating is at an all-time low as Americans feel the brunt of high inflation — a risk few within and beyond the administration have taken. seriously when he signed the US Rescue Plan (ARP).

Sylvan explains here.

Good to know

The coronavirus pandemic has forced millions of working parents to juggle work responsibilities and childcare, and a new report sheds light on how these childcare struggles have negatively affected the employment of carers .

A study from the University of North Carolina (UNC) School of Medicine examined job disruptions related to child care before and after COVID-19. The results showed that there was a 30-40% increase in job interruptions due to childcare difficulties among all parents, regardless of their child’s health needs.

Here’s what else we’ve got our eyes on:

  • Former Federal Reserve Chairman Ben Bernanke said in an interview on Sunday that he believed the Fed could fight inflation with a “soft landing” to avoid a recession.
  • Amazon will begin delivering orders to a California city by drone later this year, the company announced Monday.
  • Reps. Bobby Scott (D-Va.) and Frank Pallone Jr. (DN.J.) have called on the Federal Trade Commission (FTC) to crack down on online price gouging for infant formula during the nationwide shortage.

That’s all for today. Thanks for reading and check out The Hill’s Finances page for the latest news and coverage. Well see you tomorrow.

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