What Really Happens Inside the Federal Reserve

Episode 121 of the Investopedia Express with Caleb Silver (January 23, 2023)

Investopedia Express Episode 121 Recirc Image

In this week's episode of The Investopedia Express podcast, we sit down with Bill Dudley, former President of the New York Federal Reserve Bank and Vice Chair of the Federal Open Market Committee (FOMC). Bill joins the show to discuss what really takes place inside the Fed and the FOMC, ahead of a key gathering of the Fed's interest rate-setting committee next week, and what we could expect at the next two meetings.

We also discuss the recent comeback in global stocks, even as recession fears grip the world economy. Investors are putting more money into cash. We look at where it might flow next.

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Term of the Week: Equity Dilution

This week's term comes to us from Just The Facts by Max on Instagram. Max suggests 'equity dilution' this week, and that is a super-smart term to know these days, given how much air has been let out of both the private and capital markets over the past 12 months, and the prospect for secondary offerings if the recovery continues.

According to my favorite website, equity dilution occurs when a company's action increases the number of outstanding shares and therefore reduces the ownership percentage of existing shareholders. Although it is relatively common for distressed companies to dilute shares, the process has negative implications for a simple reason: A company's shareholders are its owners, and anything that decreases an investor's level of ownership also decreases the value of the investor's holdings. Good suggestion, Max!

Links for Show Notes

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
https://www.investopedia.com/terms/v/vix.asp
https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_012023.pdf
https://www.investopedia.com/ask/answers/06/dilutivestock.asp
https://www.youtube.com/watch?v=T0cAGOgJH3c
https://www.newyorkfed.org/aboutthefed/orgchart/dudley.html
https://gceps.princeton.edu/william-c-dudley/
https://www.abebooks.com/signed/Economics-Introductory-Analysis-Samuelson-Paul-McGraw-Hill/30058256356/bd

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