💡 Where Does The Fed Go From Here?

Good morning. US stock futures inched higher in Thursday morning trading as uncertainty around when the Federal Reserve will begin to cut rates have investors worried that markets have gotten overly optimistic.

🏦 US Fed sees “higher for longer” rate scenario, but signals possibility of cuts

📝 Our report: In the majestic halls of monetary policy, Federal Reserve policymakers gathered and decided that they'd keep the restrictive vibes flowing for a while still. According to the latest minutes of the Dec. 12-13 Federal Open Market Committee meeting, Fed officials agreed to maintain rates at current levels while also acknowledging that rates might have peaked and they could begin cutting in 2024.  

 🔑 Key points:

• “Participants viewed the policy rate as likely at or near its peak for this tightening cycle,” the minutes noted.

• The minutes also indicated increased optimism among participants about the path of inflation, noting “clear progress.”

• The committee expressed a willingness to cut the benchmark lending rate in 2024 should that trend continue, though they gave no indication easing could begin as soon as March, as per the expectations of futures traders.

💡 So what: When the Federal Reserve contemplates a possible benchmark interest rate cut, the central bank will usually be aiming to invigorate economic activity through several channels. Ultimately, the effectiveness of rate cuts is contingent on numerous factors (inflation, borrowing costs and capital spending) and the Federal Reserve considers these dynamics as it navigates monetary policy.

Thursday - Initial Jobless Claims (wk end Dec 30)

Friday - US Unemployment Rate

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🛑 US bankruptcies surge in 2023

WHAT: Bankruptcy filings in the U.S. went up by 18% in 2023, riding on the coattails of higher interest rates, stricter lending standards, and the slow jog of pandemic-era safety nets off the stage. Total bankruptcy filings - encompassing commercial and personal insolvencies - rose to 445,186 last year from 378,390 in 2022, according to data from bankruptcy data provider Epiq AACER.

WHY: Bankruptcy case counts are expected to keep climbing in 2024, though there is still some distance to go to top the 757,816 bankruptcies filed in 2019, the year before the pandemic struck.

🚙 GM leads US auto sales

WHAT: In a tale of automotive one-upmanship, General Motors sashayed its way to victory, narrowly outshining Toyota Motor as the reigning champion in U.S. car sales for 2023. The Detroit automaker shrugged off a hit from a costly auto strike to report U.S. new vehicle sales of about 2.6 million units for 2023, up 14.1% from 2022, while Toyota's annual sales rose 6.6% to about 2.25 million vehicles.

WHY: Overall, U.S. new vehicle sales last year finished at around 15.5 million units, of which electrified vehicles including hybrids made up nearly 17%, according to data released by Wards Intelligence. That was the highest since 2019 and surpassed sales of nearly 13.9 million in 2022, according to figures from consultant Cox Automotive.

🤝🏽 Apple settles iTunes gift card lawsuit

WHAT: Apple has decided to settle a lawsuit that accused it of playing Santa Claus for scammers with its gift cards. The company agreed to settle the suit that alleged Apple knowingly letting scammers exploit its gift cards, and keep stolen funds for itself.

WHY: The scam involves fraudsters who instill panic or urgency by insisting by phone that victims buy App Store and iTunes gift cards or Apple Store gift cards in order to pay for taxes, hospital and utility bills, bail and debt collection. Victims are then told to share the codes on the backs of the cards, despite a warning on the cards that reads: "Do not share your code with anyone you do not know."

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