Weekly Report – December 14, 2022

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Highlight of the Week

Fed Raises Rate by 0.5 Percentage Point, Signals More Increases Likely

  • The Fed raised the benchmark federal-funds rate to between 4.25% and 4.5% which is a 15-year high
  • Powell indicated that the fed will continue to raise rates in 2023 to a benchmark rate between 5% and 5.5%
  • Long term bond yields have fallen in anticipation of a recession and unemployment is predicted to up to 4.6% next year

Rate Curves

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Rapid Report:

Abelian Brand Mark

WeWork’s Once Robust Cash Reserves Have Dwindled, Raising Chances of Default

  • WeWork is attempting to become profitable before its cash reserves run out
  • WeWork recorded a negative cashflow between July 2020 and September 2022, but it has covered its losses thanks to loans and equity investments from SoftBank Group Corp. totaling more than $10 billion
  • The CEO stated that the company has enough funds to make it through 2023 as it continues to cut costs. However, worsening macro conditions could spell disaster as fewer of WeWork’s clients need desks with he upcoming lay-offs by big tech companies

AIG to Officially Shut Unit That Failed in Financial Crisis

  • American International Group Inc.‘s (AIG) financial products group which was a key player in the 2008 financial crisis with wrong-way bets on mortgages will be shut down
  • AIGFP owes a debt to its parent company of $37.4 billion for the losses that they incurred. AIG does not expect repayment of the sum.
  • AIGFP has remained in existence as a legal entity in order to resolve outstanding litigation that resulted from the financial crisis
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Weekly Report – December 7, 2022
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