Topic Of The Day:-“Winter Bear Hug: On Weakening Stocks”

Stocks Everywhere Show Signs Of Weakness As Central Banks Tighten Monetary Policy

U.S. President Donald Trump probably did not have his best Christmas this year. American stocks suffered their worst Christmas-eve loss in market history with the Dow Jones Industrial Average losing a massive 650 points on Monday, a drop of almost 3% within a single trading session. Mr. Trump has been keen on projecting the stock market’s performance as a gauge of how well the U.S. economy is doing under his presidency. While U.S. and global stocks performed extremely well in the first year of Mr. Trump’s presidency, they haven’t lived up to his expectations this year. The Dow Jones, now down almost 19% from its peak in early October, is clearly teetering near bear market territory. The index is down about 12% since the beginning of the year. The S&P 500 is already more than 20% down from its intra-day peak during the year, thus meeting the common definition of a bear market. And the Japanese Nikkei index dropped 5% on Christmas day. The Christmas-eve slump in the U.S. came after Treasury Secretary Steven Mnuchin’s statement on Sunday announcing the convening of the President’s Working Group on Financial Markets,colloquially known as the Plunge Protection Team, that last met in 2008 in the midst of the global financial crisis. Investors interpreted the statement as a sign of possible trouble brewingwithin the financial system, thus contributing to at least some of the panic in the markets on Monday.

It is no surprise that stocks in the U.S. and around the world have shown signs of weakness just around the time the Federal Reserve and other major Western central banks have been keen on ending the era of easy money by tightening monetary policy. Many major indices have either broken their short-term uptrend or struggled to go past their most recent highs. Mr. Trump has expectedly been public about his criticism of Federal Reserve Chairman Jerome Powell, who has surprised many by sticking to his plan of gradual rate hikes despite U.S. inflation beingcomfortably below the Fed’s target rate of 2%. He fears that rising interest rates could deraileconomic growth that has been quite robust in recent times and affect his popularity. Historically, politicians have generally favoured easy money policies represented by low interest rates while central bankers have insisted on sticking to their primary mandate of controlling price inflation. So the battle between the President and the Federal Reserve Chairman is not completely surprising, except for Mr. Trump’s criticism of the Fed. What is important to observe is how markets, which have now clearly begun to price in the effects of tighter monetary policy around the world, will fare in the era of more normalised interest rates.



1) massive

Meaning : large and heavy or solid.(adj)

Synonyms : colossal

Antonyms : common

Example : “a massive rampart of stone”

2) keen

Meaning : having or showing eagerness or enthusiasm.(adj)

Synonyms : anxious

Antonyms : apathetic

Example : “a keen gardener”

3) teetering

Meaning : move or balance unsteadily; sway back and forth.

Synonyms : falter

Antonyms : stabilize

Example : “she teetered after him in her high-heeled sandals”

4) slump

Meaning : sit, lean, or fall heavily and limply.(v)

Synonyms : collapse

Antonyms : increase

Example : “she slumped against the cushions”

5) convening

Meaning : come or bring together for a meeting or activity; assemble.(v)

Synonyms : gather

Antonyms : disperse

Example : “he had convened a secret meeting of military personnel”

6) interpreted

Meaning : explain the meaning of (information or actions).

Synonyms : explained

Example : “the evidence is difficult to interpret”

7) brewing

Meaning : make (beer) by soaking, boiling, and fermentation.

Synonyms : boil

Antonyms : dehydrate

Example : “within five years the company will brew as much beer in China as in Australia”

8) contributing

Meaning : give (something, especially money) in order to help achieve or provide something(v).

Synonyms : commit

Antonyms : hold

Example : “taxpayers had contributed £141.8 million towards the cost of local services”

9) panic

Meaning : sudden uncontrollable fear or anxiety, often causing wildly unthinking behaviour.(n)

Synonyms : confusion

Antonyms : bravery

Example : “she hit him in panic”

10) indices

Meaning : in a book or set of books) an alphabetical list of names, subjects, etc. with reference to the pages on which they are mentioned.

Synonyms : ratio

Example : “clear cross references supplemented by a thorough index

11) uptrend

Meaning : an upward tendency, especially a rise in economic value.

Synonyms : rise

Antonyms : decline

Example : “the uptrend in sales and profits is expected to be sustained in the October-March period”

12) despite

Meaning : without being affected by; in spite of.

Synonyms : against

Example : “he remains a great leader despite age and infirmity”

13) comfortably

Meaning : in a physically relaxed way that is free from constraint.(adv)

Synonyms : easily

Antonyms : insufficiently

Example : “he lounges comfortably in an armchair”

14) midst

Meaning : the middle part or point.(n)

Synonyms : bosom

Antonyms : exterior

Example : “he left his flat in the midst of a rainstorm”

15) gauge

Meaning : estimate or determine the amount, level, or volume of.(v)

Synonyms : indicator

Antonyms : extreme

Example : “astronomers can gauge the star’s intrinsic brightness”

16) colloquially

Meaning : (of language) used in ordinary or familiar conversation; not formal or literary.

Synonyms : vernacular

Antonyms : formal

Example : “colloquial and everyday language”

17) gradual

Meaning : taking place or progressing slowly or by degrees.(adj)

Synonyms : creeping

Antonyms : intermittent

Example : “the gradual introduction of new methods”

18) struggled

Meaning : make forceful or violent efforts to get free of restraint or constriction.(v)

Synonyms : cope

Antonyms : forget

Example : “before she could struggle, he lifted her up”

19) derail

Meaning : obstruct (a process) by diverting it from its intended course.

Synonyms : crash

Antonyms : aid

Example : “the plot is seen by some as an attempt to derail the negotiations”

20) robust

Meaning : strong and healthy; vigorous.

Synonyms : booming

Antonyms : fragile

Example : “the Caplan family are a robust lot”

21) insisted

Meaning : demand something forcefully, not accepting refusal.(v)

Synonyms : assert

Antonyms : abandon

Example : “she insisted on carrying her own bag”

22) mandate

Meaning : an official order or commission to do something.(n)

Synonyms : decree

Antonyms : breach

Example : “a mandate to seek the release of political prisoners”

23) era

Meaning : a long and distinct period of history(n)

Synonyms : generation

Example : “his death marked the end of an era”

24) normalised

Meaning : bring or return to a normal or standard condition or state.(v)

Synonyms : assign

Antonyms : disorder

Example : “the two countries normalized diplomatic relations in 1995”