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.
MEANINGS AND WORDS
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”
