The Fed says it’s standing pat through 2022—but markets don’t love the tune

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.

Good morning, Bull Sheeters. This is Fortune finance reporter Rey Mashayekhi, filling in for Bernhard Warner for the rest of this week.

The Federal Reserve is maintaining interest rates at near zero for the time being—and plans to keep them there through 2022, it said Wednesday. You would think that would energize the markets, but as we’re about to see, the response has been tepid at best.

Markets update


  • Asia’s major indices all fell on Thursday. The Nikkei (-2.8%) and Hong Kong’s Hang Seng (-2.3%) saw the steepest drops, while on mainland China, the Shanghai Composite (-0.8%) and Shenzhen Component (-0.8%) notched downward. In South Korea, the KOSPI also fell (-0.9%).
  • New inflation data out of China underwhelmed. The Producer Price Index in May fell 3.7% from the previous year, per China’s National Bureau of Statistics, while the Consumer Price Index rose 2.4%. Both metrics failed to meet analyst projections.
  • Despite worsening U.S.-China relations this year, China keeps buying American soybeans, as Bloomberg reports.


  • The European bourses all ended Wednesday down slightly, but early signs pointed to bigger losses on Thursday. London’s FTSE, Frankfurt’s DAX, the CAC 40 in Paris, and the pan-European STOXX 600 all started the day down more than 2%.
  • Uber’s loss in its doomed Grubhub merger would appear to be Just Eat Takeaway’s gain. The Netherlands-based online food ordering firm has swooped in and agreed a $7.3 billion acquisition of Grubhub, after the latter’s talks with Uber fell apart.
  • Inditex—the Spanish fast fashion giant that owns Zara, Massimo Dutti, and other retailers—reported its first-ever quarterly loss on Wednesday, and the numbers were brutal. Inditex registered a net loss of 409 million euros ($465 million) between February and April, and not even a 50% increase in online sales could prevent revenues from being nearly halved amid the coronavirus pandemic.


  • The Dow (-1%) and S&P 500 (-0.5%) fell for a second straight day Wednesday, while the Nasdaq (+0.7%) enjoyed its new 10,000-point reality with further gains. Futures were down across the board Thursday morning.
  • As we touched on earlier, the Fed expects to keep interest rates at near-zero “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” That could be a while; it forecasts that the U.S. economy will shrink 6.5% in 2020, before bouncing back with 5% growth in 2021 and 3.5% growth in 2022. It also expects an unemployment rate of 9.3% by the end of this year.
  • The Fed also provided guidance on its quantitative easing measures, after gradually reducing its bond-buying program in recent weeks and months. The central bank says it will continue to purchase at least $80 billion in Treasurys and $40 billion in mortgage-backed securities per month.
  • U.S. consumer prices continued to show signs of weakness, having fallen—albeit less significantly—for the third straight month in May, the Department of Labor said Wednesday.


  • Gold rose on the Fed’s bearish outlook for the U.S. economy.
  • The dollar sank to a three-month low against the euro and the pound.
  • Crude oil climbed, with Brent settling at more than $41/barrel Wednesday.

Overdue rental

The party appears to be over for retail investors who jumped on the Hertz bandwagon—driving the bankrupt rental car firm’s stock to more than $5 a share this week despite the long, painful financial road ahead for the company.

On Wednesday, Hertz disclosed that it had received a delisting notice from the New York Stock Exchange that would see the company’s stock relegated to over-the-counter trading platforms. While Hertz said it has appealed the delisting, news of the notice was enough to send shares down nearly 40% yesterday.

Hertz’s run-up bewildered many observers, as retail investors flocked to the stock—many of them making a pretty penny—even after legendary Wall Street heavyweight Carl Icahn threw in the towel on the company last month at 72 cents a share (losing nearly $2 billion in the process). 

Online brokerage platforms have witnessed a surge in new users amid the coronavirus pandemic—with young, novice traders, in particular, seemingly drawn to the market as shutdowns have taken away sports (and sports betting) and other forms of entertainment. With the market continuing its extraordinary rebound and millions of Americans newly equipped with stimulus funds to spend, many have looked to get in on the action.

In turn, lower-priced and distressed stocks like Hertz and JCPenney have seen their trading volumes pop, as opportunistic investors have sought to turn a quick buck on cheap equities. Of course, equity investors are among last in line to get paid when a company files for bankruptcy, which makes those companies’ spiking share prices all the more bewildering.

But where the market offers opportunity, so does it risk. One can only hope that those who rode Hertz to its heady, $5.53-per-share highs were wise enough to dump the stock before it came crashing back down to reality.


That’s all from me, for now. Have a wonderful Thursday and see you tomorrow.

Rey Mashayekhi

A note from my Fortune colleagues on a timely new initiative:

Many companies are speaking out against racial injustices right now. But how do they fare in their own workplaces? Black employees in the corporate world, we want to hear from you: Please submit your anonymous thoughts and anecdotes here.

As always, you can write to or reply to this email with suggestions and feedback.

Today's reads

From hot to flop. Legendary Fortune scribe Shawn Tully has taken a must-read dive into ZoomInfo’s initial public offering. What was heralded as a triumph for the beaten-down realm of tech IPOs was, in reality, an underpriced “flop” that left an incredible $576 million on the table for the company and its investors, Shawn reports.

Oil money. The collapse of oil prices may be one of the biggest market-related stories of the year, but not everyone is rueing the fall of crude. Goldman Sachs’s commodities desk generated more than $1 billion through the first five months of this year, Bloomberg reports, as its traders saw their big, bearish bets on oil’s slump reap enormous benefits.

More aid on the way? Treasury Secretary Steven Mnuchin believes the federal government needs to do more to help American businesses that have been devastated by the coronavirus pandemic. Fortune’s Anne Sraders examines what that may entail (more Paycheck Protection Program funds, perhaps?) and the potential obstacles in the way.

Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.

Market candy

“We’re not thinking about raising rates. We’re not even thinking about thinking about raising rates.”

Fed chairman Jerome Powell, giving his apt prognosis of the central bank’s monetary policy in the time of coronavirus.

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.

Read More

CEO DailyCFO DailyBroadsheetData SheetTerm Sheet