Enough is enough

I gave you a brand new Ford, you said ‘I want a Cadillac.’
I bought you a ten dollar dinner, you said ‘Thanks for the snack.’
I let you live in my penthouse, you said it was just a shack.

– Performed by B.B. King

Talk about ungrateful! It appears that “Big Tech” stocks are not satisfied with the lowest yield on corporate debt ever. Nor are they content with the $100 billion of Treasuries and Agency Mortgage Backed Securities the Fed has been buying every month since the spring. Additionally, on their “things-we-should-be-grateful-for-but-aren’t list” is the Fed and Treasury facilities to purchase securities with some credit risk as well as corporate lending facilities. A lot of stockholders, bondholders, and Wall Street structured products desks are wealthier and happier because of the “Fed has our back” mentality created by these programs. Nevertheless, from Bloomberg News:

Big tech’s market-leading days might be numbered, thanks to Federal Reserve Chairman Jerome Powell. The NASDAQ 100 sank as much as 2.8% on Thursday, dragged down by a slump in the megacap technology stocks that have powered this year’s rebound. The slide came after Fed policy makers pledged to keep interest rates low until inflation averages over 2%, while failing to give any fresh details on the central bank’s bond-buying plans. Near-zero borrowing costs have helped to justify the industry’s lofty valuations, with the NASDAQ 100’s price-earnings ratio exceeding 40 before the latest selloff—the highest since 2004. That’s pushed the NASDAQ 100 up by about 58% from its March lows.

 

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