Jerome Powell’s Lousy Market Record for Fed Day Ends

Since he took over the Federal Reserve, stocks had dropped on days when its policymaking body wrapped up work—until yesterday.

It’s about time. Since he took over as Federal Reserve chairman last year, Jerome Powellhad run up a streak of S&P 500 sell-offs on Fed Day, when the central bank’s policymaking arm meets. But that dubious record—seven in a row, according to Bespoke Investment Group—came to an end Wednesday.

The S&P 500 advanced 1.6%, as the Fed indicated that it would be “patient” about hiking interest rates and would end its effort to reduce its $4 trillion-plus balance sheet, an action that also tends to push up rates. Powell told a news conference that the reduction would cease “sooner and with a larger balance sheet” than previous statements had estimated.

Powell’s poor market performance on Fed Day was out of sync with how stocks had behaved for his predecessors. The S&P 500 averaged a gain of 0.28% on Fed Days since 1994, Bespoke stated. In fact, the record of Powell’s successor, Janet Yellen, was far superior on Fed Day. Ed Yardeni, the economist, once in jest called her the “fairy godmother” of the bull market.

Powell had the bad fortune to assume leadership of the Fed during a rocky year for the market, which included two corrections—dips of at least 10% from the recent peak—one right after he became chair. In part, that turbulence was due to fear that the Fed would boost rates faster than the economy could stomach, touching off a recession.

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But stocks have staged a modest comeback in 2019 thus far, advancing almost 7%. Last year, the Fed hiked short-term rates four times, and several months ago, the betting was for a similar schedule this year. Now, however, futures pricing implies no increases in 2019.

If so, then maybe Powell will enjoy a more buoyant market on Fed Days up ahead.

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Rhode Island Retirement to Lead Class Action Lawsuit against Google

Google’s failure to disclose security breaches ‘necessitate legal remedy,’ pension says.

The $8.1 billion Employees’ Retirement System of Rhode Island (ERSRI) has been named the lead plaintiff in a class action lawsuit against Alphabet Inc., the parent company of Google, over the October 2018 revelation that the company failed to disclose a security breach that compromised the personal information of 500,000 users.

Following the October news, Alphabet later revealed  the number of users whose private information was compromised was significantly larger than it had originally reported, surmounting to over 52.5 million accounts.

“Google knew that there had been a security breach and that users’ private information had been compromised, and instead of disclosing the information, they chose to hide it,” Rhode Island Treasurer Seth Magaziner said in a statement.

All similar class action lawsuits brought against Google in relation to its failure to disclose the security breach will be consolidated under the ERSRI-led case. Suitors objecting to the consolidation will have 10 days from the January 25 ruling to file their objections with the Northern District of California.

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The ERSRI, which holds about 44,500 shares in Alphabet Inc., valued at approximately $47.7 million, “petitioned to serve as lead plaintiff because we felt that we had both the standing and internal resources to support the suit,” a spokesperson for the retirement system told CIO.

“We monitor the behavior at companies in which we invest regularly and encourage practices that are in the long-term interest of the company and its shareholders,” the spokesperson added. “Often, this involved engaging companies to help improve practices, however in matters like the one at Alphabet, we feel it is necessary and appropriate to seek legal remedy.”

The ruling, ordered by United States District Judge Jeffrey White, also approved Robbins Geller Rudman & Dowd LLP as lead counsel.

As a result of the case, Google is shutting the doors on its Google Plus social network, which the company claims third-party apps that integrated the platform onto their software were granted the ability to view private information of its users through a “glitch.” The social network is expected to cease operations March 7, 2019.

“We found no evidence that any developer was aware of this bug, [or that] any profile data was misused,” Google said in an earlier statement.

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