Wall Street: Don't Let Calm Markets Fool You
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What headline money and market stories open this Wall Street briefing?
Your Money Briefing. Money and Market Stories from The Wall Street Journal. I'm J.R. Whalen at The Wall Street Journal in New York. If you think the relative calm start to March on Wall Street means that we are beyond spurts of volatility, you may want to think again. We'll have details on that in just a moment, but first, here are some money items you need to know. CVS and Aetna stockholders have voted to approve the pharmacy company's acquisition of the health insurer. More than 98% of the shares voted among CVS shareholders were in favor of the proposal. And among Aetna shareholders, about 97% of the votes cast were in favor of the transaction. Volkswagen has voted to overtake electric car pioneer Tesla with an extensive rollout of battery and hybrid models over the next five years, as well as new production facilities around the world.
The German carmaker, which is the largest worldwide with sales of 10.7 million vehicles last year, said on Tuesday it would build at least 16 electric vehicle plants by 2025 in Europe, also in China and the U.S. The company expects nine of those plants to be in operation by 2020.
How did March’s market calm compare to February’s volatility?
And the Wall Street Journal heard on the street team says that while Federal Reserve policymakers won't hesitate to raise interest rates when they meet next week, they could face some tough decisions over the course of this year if inflation remains relatively quiet and the fiscal stimulus helps to push stock and asset prices higher. While economists still don't agree in what defines a bubble, a look at past economic events means they will have to pay close attention to the health of the U.S. economy. The housing and credit bubbles that led to the financial crisis came about during a period where of unexpectedly low inflation and good economic growth. And the same was true for the dot-com bubble.
This is your Money Briefing from The Wall Street Journal. Welcome back, everybody. On Wall Street, March came in like a lamb as compared to the storminess of February's volatility. But Wall Street Journal heard on the street Deputy Editor Spencer Jacob is here with a suggestion that we best not be fooled by the current relative market calm into thinking the winds of volatility have changed. So, Spencer, Wall Street seems to have shaken off the topsy-turvy month of February. The S&P 500 is back to only 3% below average. It's January peak and actually is up 4% for the year. But the economic data we've gotten in March paints a muddier picture than we actually had back in January.
It does. And the first thing that people think of is the blowout jobs report that we had last Friday. And that was kind of a Goldilocks moment, right? Because you had great growth, period, way better than expected, and you had pretty muted jobs gains. But you've had purchasing managers indexes and other data points around the world that that are more so-so. And that's a reminder that the entire world is not necessarily booming, that you do have some mixed messages there.
And in Richard Barley's Heard on the Street column in the Wall Street Journal, he points out the Purchasing Managers Index says that growth may have actually peaked.
It's possible. Of course, hindsight is 20-20. You'll only know that. There are many ebbs and flows in the data. But it does look somewhat lukewarm. And so the question is, where are we in the cycle? Because on top of all this, the most important thing, the most important thing for the last nine years has been what central banks have or haven't been doing and what they might or might not do in the future. And we know that. that they are continuing on with the withdrawal of stimulus. The U.S. is in the lead there, where we started to unwind the balance sheet of the Fed. But other parts of the world as well, they're taking the foot off the accelerator somewhat in terms of stimulus. And what effect is that going to have?
We had a pretty serious hiccup in February with volatility products blowing up.
Well, that's a pretty significant moving part, the fact that there is this constant outflow of money.
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