🧯Finally the balance sheet talks begin🔨

Equity market broadly sank after Vice Chairman nominee, Brainard spoke about reducing the balance sheet next month. The comment pushed the 10 year Treasury yield to hit a high note at 2.46% during the trading session and rose further. The immediate dive seen in the stocks showed renewed market participants fear of an accelerated monetary tightening. 

The dual effect of a potential interest rate hike coupled with balance sheet reduction is likely to push rate higher and dampen consumption and business investment appetite, which collectively aim to dampen inflation. 

Pika World is seeing more downside pressure as the narrative drove to the eardrums of investors. The melody had melted. 

🧨China Delisting Woes?🛎

Investors are eyeing a proposed change by the Chinese regulators that will open the door to non-Chinese government agencies to read through audit documents. This will mark a tremendous step towards lowering the risk of delisting in the US. 

The move had provided support to many of the Chinese ADRs in the US. Indeed, the Holding Foreign Companies Accountable Act had provided the path toward delisting Chinese companies unless the companies can comply with US auditing standards for a full 3 consecutive years by 2024. 

While the risks have been reduced, it is not been removed yet, and Pika World remains cautious on possible swings in sentiments. 

💈Recession narrative is louder🍟

In his annual letter to shareholders, Jamie Dimon, CEO of JPMorgan, had warned about the heightened risk of a potential US recession in the sea of headwinds. 

While the hope is for a turnaround situation and progress for continued economic expansion, the bank is prepared for any unexpected downturn. Still, he signalled the bright outlook of a strong economy full of jobs and strong wage growth that could keep the economy floating. 

Yet, the interest rate hike was one of the risks raised, and if the Fed can communicate effectively with its tools to bring down the inflation rate, there can be multiple good years of growth ahead. 

As sanctions against Russia started to bite into the global economy, it is a new reality that investors have to face.