| The Fed fuels a rally in stocks, central banks in Europe take center stage and Adani's losses top $100 billion. — David Goodman The Federal Reserve delivered an expected 25 basis-point hike on Wednesday with Chair Jerome Powell saying policymakers expect to deliver a "couple" more interest-rate increases before putting their aggressive tightening campaign on hold. But traders took heart from his remarks acknowledging that price pressures have started to ease, sending stocks on a rally and pushing the dollar lower. Expect that bullishness to be tested again within weeks by key economic data. Now, it's Europe's turn. At 7 a.m. New York time the Bank of England is likely to deliver its 10th consecutive interest-rate increase, with a 50 basis-point move expected alongside forecasts underscoring the risk that inflation becomes more persistent in the UK economy. Just over an hour later, traders expect the European Central Bank to deliver its own half-point move. Like with the Fed, outlooks are set to be far more important than the decisions themselves, with FX investors bracing for a bigger impact from Andrew Bailey than Christine Lagarde.  | Gautam Adani's businesses have lost $107 billion in a week, after an explosive report by short seller Hindenburg Research forced him to pull a $2.4 billion stock sale at the 11th hour and had some lenders reject his securities as collateral. Adani has seen his personal wealth plummet by around $57 billion since Hindenburg accused his companies of fraud to inflate revenue and stock prices.
Adani said his conglomerate would examine its capital market plans after scrapping the share sale. Bonds of the Indian billionaire's flagship firm plunged to distressed levels in US trading. Citigroup's wealth arm has also joined Credit Suisse in no longer accepting securities of Adani's group of firms as collateral for margin loans. The tumult has become a national issue with lawmakers disrupting parliament to demand answers from Prime Minister Narendra Modi's government. European stocks climbed with US equity futures, building on Wall Street's advance after Powell's comments. The Stoxx Europe 600 Index added about 0.6%. Technology stocks led the advance, buoyed by an upbeat outlook from German chipmaker Infineon Technologies. European bonds rose, the pound fell before the BOE decision and gold advanced. To catch up on the trading day in the UK and Europe, check out today's edition of Markets Today. Away from the big central bank decisions in Europe, the US is due to report jobless claims and durable goods numbers, before Friday's ever-important payrolls data. Meanwhile, Apple, Amazon, Alphabet and Ford are among the companies reporting earnings. Here's what caught our eye over the past 24 hours: Over the last several months, we've seen data that's more or less consistent with the soft landing outcome. Inflation has come down, even as the unemployment rate has fallen to a 50-year low. So we know at least over some period of time it's possible for these two trends to coexist. To some extent my takeaway from Powell yesterday was he acknowledged that this can happen in practice. He said at one point that he was "gratified" by the direction of the data. But there's still doubt at the Fed that it can work in theory. There were multiple instances yesterday in yesterday's press conference, where the Fed Chair stressed that they still need to see more evidence that the deflation was happening, and he repeatedly cited the category of 'services ex-shelter' as a source of concern, since unlike various goods and rent, there are few signs yet that it's coming down. But again, he did acknowledge that some progress has been made. And he didn't really say anything to push back against the recent loosening of financial conditions (unlike last summer), so markets were off to the races. The NASDAQ is now up nearly 13% since the start of the year. All that being said, it's worth taking seriously that the Fed is not declaring "mission accomplished" by any stretch. There's more work to do. At one point Powell expressed hope that inflation can be vanquished without a "significant" rise in the unemployment rate, with the insinuation being that maybe the effort to defeat inflation will only require a modest rise in the unemployment rate. A big question though is whether a modest rise is even possible, or whether a modest rise in the unemployment rate inevitably leads to a larger rise. Yesterday, JW Mason (an economics professor at John Jay college in NYC) posted this chart, which he describes this way: "The horizontal axis shows how far the current unemployment rate is above the maximum or below the minimum for the past 12 months. (If it's within that range, the value is 0). The y-axis shows the change in the unemployment rate the following month. If the unemployment rate is even 0.1 points above the range of the past year, it is far more likely to rise than to fall in the following month. If it's much more above the range of the past year, it essentially always rises in the following month." In other words, if you look at the right half of the chart, what it shows is that there is a tendency for the unemployment rate to rise once it already goes up. Higher unemployment creates its own momentum (which should be intuitive, since everyone's spending is someone else's income). Obviously there are good signs out there. Housing has stabilized it would seem. Car sales yesterday came in red hot. Facebook earnings show the bottom hasn't totally fallen out of all tech etc. But the labor market has slowed down, and the Fed isn't done working. So the danger would be if a modest decrease in employment snowballs into a much larger one. | 
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