![]() ![]() “That would be a mistake.”įirst, the trend represents what the economist calls a “realignment of the investment landscape at its outer edges.” Reddit allows individual investors to coordinate effectively and intelligently, similar to the way that other social media platforms have helped activists coordinate actions. Second, El-Erian said it illustrates how ultraloose monetary policy enables risk-taking. “It is the same combination that has fueled the SPAC and cryptocurrency phenomena that are causing belated indigestion for a growing number of governments and central banks,” the economist added.Ĭash handouts and easy leverage are the main forces, and themselves come from a shift in central bank strategy toward low interest rates and huge injections of liquidity. Plus, this essential reading: Tendies? Diamond hands? Your guide to the lingo on WallStreetBets, the Reddit forum fueling Gamestop’s wild riseįinally, the meme stock frenzy is the latest in a series of episodes where market regulators have been too late to the game, El-Erian said. Regulators face difficult questions “for which there is no broad agreement on answers,” the economist said, ranging from investor suitability and protection to market manipulation and stability. “Dismiss the AMC whirlwind at your peril,” El-Erian said. “It is part of a much wider phenomenon whose implications go well beyond the immediate and well beyond retail investors.”Įl-Erian added that it is hard to tell what may undermine the current jump in AMC’s stock price. ![]() “What is certain is that the further the price goes up exponentially, the tenser the tug-of-war will become between new speculative buyers and those looking to sell and monetize significant returns,” the economist said.ĪMC stock fell back from highs after the company announced a new stock sale to take advantage of the extraordinary interest in the company. The group plans to sell 11 million shares, and warned investors that they “risk of losing all or a substantial portion” of their investment. imposed tariffs on the U.K., India, and four other countries on Wednesday in response to national taxes on U.S. But the tariffs were immediately suspended for six months to leave room for international negotiation on digital services taxes. economic front, the number of Americans who filed for unemployment fell below 400,000 for the first time since the beginning of the pandemic, with 385,000 initial jobless claims reported last week. There were 3.77 million continuing jobless claims in the week of May 22. The ADP employment report, which measures the monthly change in private, non-farm payroll data, showed that the U.S. ![]() economy added 978,000 private-sector jobs in May, well above the 680,000 figure expected. Revised figures for productivity and unit labor costs for the first quarter of the year showed productivity at 5.4% and labor costs at 1.7%. The ISM services index for May showed growth of 64%, outpacing expectations of 62.5%. Later, Federal Reserve vice chair Randal Quarles will speak. The Fed announced on Wednesday that it would begin selling the corporate bonds and exchange-traded funds that it bought during the pandemic. ![]()
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