Fed may delay the rate of its interest rate hiking cycle, Musk’s Tesla lawsuit to hit court, U.S stock market rally

Summary:

• The Fed may think about delaying the rate of rate rises at its next meeting.
• Shareholders claim that Tesla has benefited its co-founder and CEO at their expense.
• U.S. stocks just experienced their greatest week since June.

Fed is still committed to decreasing inflation

Federal Reserve Governor Christopher Waller said on Sunday that the U.S. Federal Reserve may think about delaying the rate of rate rises at its next meeting, but it should not be seen as a "softening" in its commitment to decrease inflation. Waller responded to a series of questions on monetary policy at an economic conference hosted by UBS in Australia by stating that markets should now focus on the "endpoint" of rate increases rather than the speed at which each move is made. Waller also noted that the endpoint is likely still "a ways off." Inflation is a factor.

Waller stated that even if the Fed stepped back from three quarter point hikes to a half point rise at its next meeting, "you're still moving up," adding that the 7.7% annualized increase in inflation recorded in October is still "enormous."

This year, starting in March, the Fed increased interest rates a total of 3.75 percentage points, including four three-quarter point increases. This swift change in monetary policy was done to combat the greatest inflationary spike since the 1980s. Analysts and economists have cautioned that the tightening of monetary policy will increase the probability of a recession and have an effect on employment.

Sherrod Brown, chair of the U.S. Senate Banking Committee, cautioned the Federal Reserve this month against tightening monetary policy to the point where millions of Americans who are already experiencing high inflation lose their jobs.

*FED MAY CUT SIZE OF RATE HIKES, BUT IS NOT 'SOFTENING' INFLATION FIGHT, WALLER WARNS - https://t.co/DtihB5nu6C pic.twitter.com/SMZnAaH5Bt

— Investing.com (@Investingcom) November 14, 2022

Musk is scheduled to testify this week

In a lawsuit filed by shareholders who claim the electric vehicle manufacturer has benefited its co-founder and CEO at their expense, Elon Musk will attempt to demonstrate his merit for a multibillion dollar pay deal from Tesla.

The richest man in the world is scheduled to testify this week in a trial that starts on Monday. He, Tesla, and members of its board are accused of violating their obligations by giving Musk share options with a maximum value of about $56 billion. Only a few weeks have passed since the 51-year-old took over Twitter, adding it to an ever-growing list of companies that he is at least nominally in charge of, including Tesla, SpaceX, Neuralink, and The Boring Company.

Tesla shareholders concerned around Musks availability

Musk's expanding portfolio, according to the attorneys representing the Tesla investors who filed the complaint, means he is too busy to serve as the automaker's chief executive on a full-time basis, let alone one deserving of a salary that "dwarfs the pay package of any other public company CEO." The case was started before Musk's $44 billion purchase of Twitter.

However, the case will be keenly followed by firms all over the US, who are concerned that a victory for Tesla shareholders may spark a wave of similar lawsuits in Delaware, where the majority of the nation's public corporations are incorporated.

Legal fight over Elon Musk’s $56bn Tesla pay deal heads to court https://t.co/ruh3wuXRhS

— Financial Times (@FT) November 14, 2022

US stock market rally

U.S. stocks just experienced their greatest week since June, and whether Wall Street can continue its winning streak in the coming days will likely depend on news from the retail industry. Investor optimism that a monetary policy shift is imminent was revived by statistics on lower inflation, but important earnings from retailers and the government's October report on the industry may put that optimism to the test.

The major averages had significant gains as a result of bets that Federal Reserve officials would dial back on interest rate increases after the Consumer Price Index (CPI) for October indicated slowing inflation last month. The Dow Jones Industrial Average increased 4.2%, while the S&P 500 gained 5.9% for the week, its highest five-day performance since the week ending June 24. With a gain of 8.1%, the Nasdaq Composite experienced its best week since March.

Stock market rally meets retail sales and retail earnings: What to know this week https://t.co/FbBltmPj4j by @alexandraandnyc

— Yahoo Finance (@YahooFinance) November 14, 2022

Sources: finance.yahoo.com, ft.com, investing.com, twitter.com