VIAC

ViacomCBS Inc.

29.58
USD
-17.81%
29.58
USD
-17.81%
27.84 101.97
52 weeks
52 weeks

Mkt Cap 17.95B

Shares Out 606.71M

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Latest CBO Projections Ease Recession Fears

For more crisp and insightful business and economic news, subscribe to The Daily Upside newsletter. It's completely free and we guarantee you'll learn something new every day. "Fed Minutes Show Officials Expecting to Raise Rates Three Times to Address Inflation." "Fed minutes point to more rate hikes that go further than the market anticipates." Headlines like these from Wednesday afternoon are enough to give any investor (after many months of pavlovian conditioning) the expectation of an immediate 4% drawdown. Yet buried in the Fed Minutes released yesterday was a hint that some flexibility exists in the Fed's mindset -- more than enough, in fact, to send markets soaring on the day. These days, the lightest flutter of a dovish intonation in a central banker's speech is good for a +2% move. Minute Men Loud and clear in the minutes were king Powell confessing "most participants judged that 50 basis point increases in the target range would likely be appropriate at the next couple of meetings." But just as quickly, he articulated the Fed plans to become "data dependent" when weighing policy action. Data dependent -- code for flexible -- is exactly what the market wanted to hear. "The one thing this Fed is very good at is being measured," said Eric Merlis, managing director of global markets at Citizens, by phone. "I chose to see this as a recognition that they're not going to go headlong along a path," he said. "They recognize things could change." In addition to favorable verbiage from the Fed, the CBO released data to suggest neither the economy, nor inflation, is quite as bad as some might believe: Inflation-adjusted GDP is expected to grow 3.1% year-over-year in the fourth quarter, the CBO estimates. That's down from 5.5% last year, but up from 2019's lackluster 2.6% GDP growth. Most importantly, it's far from an economic contraction. The CBO pegged inflation, measured using the consumer-price index, at 4.7% in the fourth quarter, a welcome drop off the 8% annual inflation seen in recent months this year. Deficit Check: When it comes to the federal deficit, the CBO delivered some short-term good news, to go along with the long-term frightening news. Let's start with the bad: by 2032, the deficit will increase to 6.1% of GDP. That's only happened 6 times since 1946. The good: This year, it'll drop to a cool $1 trillion, down from $2.8 trillion. It's not much, but we'll take it. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

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