What’s going on here?

The Federal Reserve (the Fed) kept investors glum by making it clear that rate hikes are still firmly on the table.

What does this mean?

The Fed previously decided against another rate hike when it met in early November, serving up the best early holiday present that investors could’ve asked for. After all, higher rates not only burden the economy by making it more expensive for businesses to invest in themselves, but they also reduce the current value of companies’ future cash flows, pulling down stock prices as a result. In other words, they’re a drag. But because the central bank believes that newly limbered-up supply chains are no longer a cause for higher prices, the Fed said it’s still down to rate hikes to tackle rampant inflation. The International Monetary Fund will approve: the financial agency cautioned central banks against easing up too soon, since inflation’s final stretch can be the hardest to corral.

Why should I care?

For markets: Stocks can’t catch a break.

Investors quickly piled into stocks when the Fed paused hikes earlier this month, won over by the prospect of higher valuations. But this latest announcement snuffed out those hopes as quickly as they were sparked. That, at a time when investors are already especially wary: US investors pulled more cash out of stocks in October than in any other month over the last two years.

The bigger picture: Flat rates are the best of a bad bunch.

It’s a desperate time when investors celebrate rates staying high. Sure, it’s better than them floating higher, but their current level is still fierce enough to cause damage. Just look at the US’s debt pile: spicy rates mean monthly payments on the $33 trillion deficit are through the roof. If the government can’t keep up, it’ll need to borrow even more, raise taxes, or print more money. Problem is, that last option will encourage companies to pull prices even higher.

What’s going on here?

Swiss luxury group Richemont reported results that could make investors look the other way on Friday.

What does this mean?

Smoked salmon is a stretch for most households these days, so it’s no surprise that luxury wares are out of the budget. Cartier-owner Richemont knows that all too well: tarnishing sales led to a lower-than-expected €10.2 billion ($10.8 billion) in revenue in the six months up to the end of September. That meant profit for the period landed at €2.65 billion ($2.8 billion), more than €200 million ($213 million) below analysts’ forecast. It checks out, then, that Richemont’s shares dipped by 6% after the results.

Why should I care?

For markets: Europe’s empty streets.

Europe’s streets are dotted with the most famous designers’ flagship stores, so much so that investors believe the luxury sector is the region’s equivalent to tech stocks in the US. That’s up for debate now, though: Europeans are steering clear and China’s wavering recovery means the country’s shoppers – usually reliable fanatics for expensive fabrics with prices to match – are testing their restraint. And with Americans’ pandemic savings running low, it’s hard to find an audience for outfits worth a month’s rent.

The bigger picture: Fashion changes, but style endures.

Luxury brands have plenty to cushion them, though – besides a stockroom of cashmere scarves. Fledgling designers have little chance of success without a reservoir of cash and a Rolodex of connections, so established names rule the roost. Plus, with a clientele that happily swipes on four-figure accessories, companies can easily add another few hundred onto price tags. What’s more, when the economy gets back on its feet, pent-up luxury fiends will likely head toward their favorite stores to celebrate. For investors into the finer things, this is essentially a sample sale: Richemont, LVMH, and Estée Lauder’s stocks have slimmed by 28%, 21%, and 43% respectively over the last six months.