- Results of the Fed meeting
- Tesla, Apple, and Facebook balance sheets announced
- ‘’GameStop’’ frenzy on Wall Street
Results of the Fed Meeting
The results of the Fed meeting were published on Wednesday evening. FED expectedly left the fed funds rate unchanged, in the range of 0–0.25%. All 10 members of the Open Market Committee (FOMC) voted in favor of this decision.
The fed funds rate will remain at the current level until the labor market reaches full employment and inflation rises to 2% or more.
The Fed reiterated that it will use all available tools to support the US economy. Monetary policy will remain stimulating, depending on the situation in the economy. The redemption of government and mortgage bonds will continue, at least in the current volumes – minimum $120 billion per month ($ 80 billion in Treasuries and $ 40 billion in mortgage securities).
The Fed noted that the coronavirus pandemic has created tremendous economic hardship in the US and around the world. The pace of US economic recovery has slowed down. Financial conditions contribute to supporting the economy, which was the result of active monetary stimulus, that is, low-interest rates. The regulator pointed to the strong dependence of the economic prospects on the situation around Covid-19, including vaccines.
“The path of the economy will depend significantly on the course of the virus, including progress on vaccinations,” the release read. “The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook.”
Weak demand and low oil prices are putting pressure on consumer inflation. The Fed’s target for inflation is 2% per annum, and for unemployment, it is about 4–5%. Consumer inflation (CPI) in December increased from 1.2% to 1.4% per annum, unemployment remained at 6.7%, employment in the private sector (non-farm payrolls) fell by 140 thousand.
The regulator will monitor the incoming information and is ready to adjust the monetary policy in accordance with the new data. The Fed will take into account the situation around the coronavirus, labor market indicators, inflation and inflation expectations, financial and international conditions.
During a press conference, the head of the Fed noted the uncertainty in the economy, which has now intensified due to the coronavirus. Powell believes that the recent rise in the US stock market was fueled not by monetary policy, but by news on vaccines and fiscal policy. The White House and Congress will agree on a $ 1.9 trillion package of anti-crisis measures, although the process may drag on until March.
The reaction of the American stock market to the results of the meeting was negative, as there were no special surprises in terms of monetary policy, but risks for the economy were noted. The S&P 500 index is down 2.8%, the EUR / USD pair is losing 0.5%, the yield on 10-year US government bonds dipped slightly to 1.023%.
Tesla, Apple, and Facebook Balance Sheets Announced
The October-December balance sheet of the technology state Apple, Facebook, and Tesla for 2020 has been announced.
According to Apple’s statement, the company’s revenue exceeded $100 billion for the first time, considering the October-December period of last year as the first quarter of the fiscal year 2021 in its balance sheet. Revenue of the company in October-December last year increased by 21 percent compared to the same period of the previous year and reached 111.4 billion dollars.
The company had revenue of $ 91.8 billion in the October-December period of 2019. Apple’s cash stock increased by 2 percent to $ 195.57 billion. Apple’s net profit also increased by 29.3 percent year on year to $28.8 billion in the same period. The company’s earnings per share also increased from $1.25 to $1.68 during this period.
Facebook, one of the world’s largest social networking sites, also increased its revenue and profit in the last quarter of last year. According to the statement made by Facebook, the company’s revenue in the fourth quarter of 2020 increased by 33 percent compared to the same period of the previous year, reaching $28.1 billion. Facebook had revenue of $21.1 billion in the same period of 2019. The company’s revenue in 2020 reached $ 85.9 billion, increasing 22 percent annually. The company’s revenue in 2019 was recorded as $70.7 billion.
Facebook’s net profit also rose 53 percent this quarter to $11.2 billion. The company had a net profit of $7.4 billion in the October-December period of 2019. The net profit of the company increased by 58 percent annually to 29.2 billion dollars in 2020. Facebook’s earnings per share, which was $2.56 in the fourth quarter of 2019, rose to $ 3.88 in the same period of 2020.
Tesla, the electric car manufacturer, also recorded an increase in revenue and profit in the last quarter of 2020. According to the statement made by Tesla, the company’s revenue increased by 46 percent in the fourth quarter of last year compared to the same period of the previous year, to 10.7 billion dollars. The company had revenue of $7.4 billion in the same period of 2019.
The company’s revenue increased by 28 percent annually to $31.5 billion throughout 2020. The company announced that it earned $24.6 billion in 2019.
Tesla’s net profit was calculated as 270 million dollars, increasing 157 percent annually in the last quarter of last year. The company had a profit of 105 million dollars in the same period of 2019.
The net profit of the company was calculated as 721 million dollars in 2020. The company announced a loss of $862 million in 2019. Tesla’s earnings per share, which was $0.11 in the fourth quarter of 2019, rose to $0.24 in the same period of 2020.
‘’GameStop’’ Frenzy on Wall Street
The epidemic period caused different reflections in different sectors. Some businesses and companies came to the point of bankruptcy, while others saw the top.
Considering that the popularity of online sales and downloading games on the internet has increased gradually during this period, it was inevitable for game retailers who make physical sales to lose money. GameStop, which suffered serious losses during this period and aimed to close 450 stores, suddenly experienced an unexpected increase in shares.
A company that many people wrote dead suddenly became the top item on Wall Street when its stock price rose to nearly 300 percent for no reason. GameStop shares, which dropped to the level of $ 3.25, rose to $ 148 at a time. This increase caused an earthquake in the stock market. This rise has become an agenda in social media.
The three largest shareholders in GameStop, the video game retailer at the center of a frenzied dual between Wall Street and small investors, have made more than $2bn from the company’s astronomic recent share rise.
Over the past two weeks, according to CNBC, Cohen’s net worth increased an average of $90m a day, or nearly $4m per hour, as GameStop stock has surged more than 1,550% this year alone.
Other winners include Donald Foss, the 76-year-old founder and former CEO of Credit Acceptance Corp, a subprime auto lender. Foss bought 5% of GameStop early last year for around $12m. His stake is now worth more than $500m.
GameStop chief executive George Sherman has seen his 3.4% stake jump to a value of about $350m.
Tesla CEO Elon Musk sparked the social media fuse with a tweet amidst this growth. By sharing the post on Reddit, “Gamestonk !!” While Musk’s tweet received tens of thousands of retweets and likes, Bitcoin investor billionaire Chamath Palihapitiya also joined the craze. The word ‘Stonk’ is a new Wall Street expression used only for stocks that are rising and need no root cause for it.
The reason for this unexpected stock increase of the video game retailer is actually a simple market mechanics story. But it’s also a fun and for-profit stock buying frenzy. With the serious depreciation of the company’s shares, the rumors that the shares of GameStop will increase on the digital social news and discussion site Reddit with more than 2 million subscribers caused small investors to create a serious purchase of these cheap shares. Thus, with the excessive purchase, its shares gained a value well above its value. However, while it is emphasized that this stock increase is a manipulative increase on Wall Street, the sales that will start after this increase and the expectation of a sharp decrease in the company stocks is dominant.
According to the White House statement, the new US Treasury Secretary Janet Yellen closely monitors the speculation created in company stocks.