The investment bank has named its top stocks set to benefit from this trend. Professional subscribers can read the story here. — Weizhen Tan
Fed’s Kashkari says his biggest fear is that inflation will be more stubborn or hotter than expected
Federal Reserve Bank of Minneapolis President Neel Kashkari says his biggest fear is that markets are underestimating how high inflation will be or how persistent it would be, adding that the Fed may need to be more aggressive than expected. “The big fear I have in the back of my mind is that the markets are wrong as well, and that this inflation is much more embedded at a much higher level than we appreciate or the markets appreciate,” he said, commenting on the market . expectations that inflation will return to 2% within the next two years. “Then we’re going to have to be more aggressive than I expect, probably for longer, to bring inflation back down,” he said, speaking at an event at the University of Pennsylvania. Kashkari also pointed to supply-side shocks driving “half to two-thirds” of the country’s high inflation. “The more supply-side help we get, the less the Fed has to do and the better we can avoid a hard landing,” he said. He added, however, that there are some signs that supply chains are beginning to normalize. Kashkari is already seen as the most hawkish of the US central bank’s 19 policymakers and expects the Fed will need to raise its policy rate – now in its target range of 2.25% to 2.5% – another two full percentage points until the end of the following year. – Jihye Li
CNBC Pro: Citi names energy stock with ‘strongest balance sheet’
The energy sector has been a big winner in this year’s volatile stock market. However, one stock still stands out for its “strongest balance sheet,” according to Citi. It also delivered a set of second-quarter earnings that easily beat the major listed companies. Professional subscribers can read the story here. — Zavier Ong
Hawkish Fed?
Many expect hawkish talk from Fed officials later this week, which could trigger a selloff in risk assets. Some fear that continued and aggressive central bank tightening will push a slowing economy into recession. “I fully expect Fed Chairman Jay Powell and other Fed officials to remain hawkish,” Invesco chief strategist Kristina Hooper said in an e-mail. “Aggressive rhetoric is very likely to send stocks down globally in the short term as markets walk on eggshells, so asset owners should be prepared for short-term volatility.” — Yun Li
Nordstrom shares fall
Shares of Nordstrom fell more than 13% in extended trading after the company cut its full-year financial guidance. Nordstrom said it was challenged by excess inventory as well as slowing demand. “Customer traffic and demand have slowed significantly since late June, particularly at Nordstrom Rack,” CEO Erik Nordstrom said in a press release. However, the company reported second-quarter financial earnings and sales ahead of analysts’ estimates. — Yun Li
