Week InReview
Friday | Feb 4, 2022
Big Tech stocks may have to work harder to keep Wall Street invested.
Illustration: Patrick Edell for Bloomberg Businessweek
IN A SINGLE two-and-a-half-hour stretch on Jan. 25, Microsoft Corp. stock erased $156 billion of its shareholders’ money, then rebounded, recovering all of its losses and adding $74 billion. In one sense this was just another lurch in the markets' wild ride in 2022, as investors adjust adjust to recovering economies and the prospect of rising interest rates. But it also points to a new environment in which the most valuable U.S. tech companies are going to have to work harder to justify their trillion-dollar or near-trillion-dollar valuations.

let's recap...
The Nasdaq’s losses on Thursday ended a four-day streak of gains. Photo: AP
Stocks on Wall Street slid by the most in almost a year on Thursday after a disappointing earnings report from Facebook parent Meta reverberated through the market. The S&P 500 index fell 2.4 percent, its biggest drop since February 2021, driven largely by falls in tech stocks that dominate the blue-chip US index. The slide ended a four-day rally and took the S&P’s declines this year to 6.1 percent. The losses for the tech-heavy Nasdaq Composite were more intense, with the index that counts Meta and Amazon as members, declining 3.7 percent, its worst day since September 2020. (Financial Times | Feb 3)

Federal Reserve officials have a message for investors ramping up 2022 interest-rate expectations: not so fast. None of six Fed officials speaking so far this week have backed the idea of a half-point rate increase in March, and the most aggressive, James Bullard, president of the St. Louis Fed, said five hikes – one more than every quarter – is “not too bad a bet.” The measured calls contrast to Wall Street forecasts for as many as seven 2022 hikes, or even a half-point adjustment. (Bloomberg Markets - Economics)

The U.S. Treasury trimmed its quarterly sale of longer-term debt for a second straight time, reflecting diminishing borrowing needs after a record ramp-up in debt to fund pandemic-relief spending. The Treasury Department said in a statement Wednesday that it will sell $110 billion of long-term securities at auctions next week — down $10 billion from November and in line with many dealers’ forecasts. It’s the first back-to-back reduction since 2015, after the unprecedented sizes of last year. (BNN Bloomberg - Canada | Feb 2)

The U.S. national debt exceeded $30 trillion for the first time, reflecting increased federal borrowing during the coronavirus pandemic. Total public debt outstanding was $30.01 trillion as of Jan. 31, according to Treasury Department data released Tuesday. That was a nearly $7 trillion increase from late January 2020, just before the pandemic hit the U.S. economy. (The Wall Street Journal | Feb 1)

The SEC’s long-delayed proposal requiring companies to report ties between their financial showing and executive compensation is bringing back corporate jitters that misleading information would cloud shareholder voting. The Securities and Exchange Commission on Jan. 27 moved to get more public feedback on the “pay-versus-performance” disclosure plan it released in 2015 under the Dodd-Frank Act and shelved in 2017. (Bloomberg Law | Jan 31)
Other Fed worry
(Feb 2) — While much of the speculation about how the Federal Reserve plans to tighten has been focused on how big and how fast rate hikes will be, Goldman Sachs Group Inc. analysts are warning about the volatility likely to stem from running down the central bank’s balance sheet. Strategists say the move will hurt liquidity in the Treasury market while also boosting volatility and affecting how different parts of the U.S. rates market are valued relative to one another. The Fed plans to end purchases next month and could allow the balance sheet to shrink through the roll off of holdings by the end of the year
the cyber cafe
The new Cyber Safety Review Board will be part of the Department of Homeland Security. Photo: Ting Shen/WSJ
New cybersecurity review board to probe failures
A new panel of senior administration officials and private-sector experts will investigate major national cybersecurity failures, and it will probe as its first case the recently discovered Log4j internet bug. The new Cyber Safety Review Board is tasked with examining significant cybersecurity events that affect government, business and critical infrastructure. It will publish reports on security findings and recommendations, officials said.

Jump in facial and voice recognition raises privacy, cyberseurity, civil liberty concerns
Whether it is facial recognition technology being used with Covid-19 screening tools and in law enforcement, continued use of fingerprint-based time management systems, or the use of various biometric identifiers such as voiceprint for physical security and access management, applications in the public and private sectors involving biometric identifiers and information continue to grow … so do concerns about the privacy and security of that information and civil liberties. Over the past few years, significant compliance and litigation risks have emerged that factor heavily into the deployment of biometric technologies, particularly facial recognition.

Cybersecurity predictions: What to expect in 2022
With the roller coaster ride that was cybersecurity in 2021, we’re all curious to see what 2022 has in store for our industry. Among the things predicted: pandemic fatigue, regulatory changes, talent shortages, and ransonware/reponses.
binge reading disorder
A 1914 advertisement for Arrow shirt collars, illustrated by JC Leyendecker. Illustration: Alamy Stock Photo
First ties, then suits — is the demise of the collared shirt next?
Is the traditional button-down shirt becoming an endangered species? If fashion has its way, then yes. While this January’s menswear shows made a strong case for a revival of the formal suit – despite predictions from many, that it would be finished off by the pandemic – it seems it’s the matching dress shirt that’s in short supply.

Coffee prices are rising, pushed up by bad weather and supply-chain woes
Higher prices are here for your morning cup of joe. First the drought came to Brazil, then the frost, roiling the world’s top coffee-growing region during the pandemic. Arabica coffee prices at one point last year were nearly twice their levels at the end of 2020. Investors are betting those weather effects, along with supply-chain snarls, will keep prices elevated in 2022. 

The world's next big health emergency is here
If we look on the bright side of the past two years, Covid should at least mean we’ll be ready for the next major threat from infectious disease. We know how to prepare, we have more advanced technology, we’ve strengthened public-health protocols. And governments have learned just how quickly science can move when offered the right incentives. All of these learnings are needed already — in the fight against growing antimicrobial resistance (AMR), or infections that don’t respond to drugs.
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