Finimize - 🥧 The Fed's humble pie

What’s going on here?

Despite Telegram’s expertise in encrypted data, self-destructing messages, and secret chats, the messaging app looked determined to make its business public.

What does this mean?

Telegram has become one of the biggest social media apps in the world: the WhatsApp-esque messaging platform now boasts 900 million monthly users, up from 500 million three years ago. With that many eyeballs passing over the in-app adverts, and with a few text addicts making room in their budgets for the premium subscription, Telegram has been pulling in hundreds of millions of dollars in revenue and claims to be within touching distance of its first profit. Big-name tech funds have already tried to pay up to $30 million for the firm, but so far, Telegram has stayed locked into the prospect of listing on the stock market.

Why should I care?

Zooming out: Telegram needs attention.

Companies only get one chance at going public – that’s why they call it an initial public offering (IPO)... probably. They want to be in the best shape of their lives when they take the step, making it impossible for investors to ignore them. Telegram’s toning up by making advertising agencies fork out between $1 million and $11 million for space, while prepping automated services for smaller-budget advertisers. Word on the street – or in this case, the messaging platform – is that Telegram might make like Reddit, giving dedicated users dibs on shares before the fat cats pile in.

The bigger picture: No one cares about privacy anymore.

The ever-present threat of a recession and stock-denting interest rates have encouraged businesses to stay sheltered, making last year the worst one for IPOs since 2019. But now that the economy is toughening up, a whole host of companies are preparing for their debut: Shein, Stripe, Reddit, Klarna, and Skims, to name a few. If their premieres pay off, more private companies will be tempted toward the limelight.

What’s going on here?

US prices were 3.2% higher this February than last, practically belittling the Federal Reserve (the Fed) just as the world had started patting it on the back.

What does this mean?

The Fed’s interest rate hikes have successfully brought inflation closer to the 2% target than its 9% heights from last year. But as if to humble the central bank, inflation came in higher than expected in February, no matter whether you look at it on a monthly or quarterly basis. Even core inflation, which strips out energy and food prices to better capture true underlying price pressures, was higher than predicted for the second straight month. Now, inflation is stubborn and volatile, so this isn’t exactly unprecedented. There’s a small chance, however, that the effect of today’s rates is tailing off, which could force the Fed to keep rates higher for longer, or even pull them – gasp – higher still.

Why should I care?

For markets: Curb your enthusiasm.

The Fed admitted last week that it was nearly confident enough to consider cutting rates. Yet, most analysts still expected the Fed to leave them at their 23-year high when it meets next week, and that worse-than-expected data all but confirms it. What’s more, disheartened investors have finally fallen in line with the Fed’s expectations of three rate cuts this year. If their hopes fall any further, the stock market could feel the brunt: investors’ predictions of stock-boosting rate cuts are major influences behind the market’s current rally.

The bigger picture: Dimon’s in the rough.

Investors reckon there’s a 70 to 80% chance that rate hikes will calm inflation without bringing about a recession. JPMorgan’s CEO Jamie Dimon, though, plots the probability at half of that. He’s most worried about “stagflation”, where inflation stays high and the economy can’t recover. Almost every portfolio would suffer in that scenario, so any staunch Dimon believers might want to hold onto some gold and treasury bonds.