✂️ Has The Fed Turned The Corner?

Good morning. US stock futures rose in Thursday morning trading as Wall Street digested the Federal Reserve’s decision to lower interest rates by a half percentage point.

✂️ US Federal Reserve begins interest rate cuts

📝 Our report: The Federal Reserve just made its first rate cut since the early pandemic days, trimming half a percentage point from benchmark rates to keep the job market from losing steam. Outside of the emergency rate reductions during Covid, the last time the FOMC cut by half a point was in 2008 during the global financial crisis.

 🔑 Key points:

• With both the jobs picture and inflation softening, the central bank’s Federal Open Market Committee chose to lower its key overnight borrowing rate by a half percentage point, or 50 basis points, affirming market expectations that had recently shifted from an outlook for a cut half that size.

• The decision lowers the federal funds rate to a range between 4.75%-5%. While the rate sets short-term borrowing costs for banks, it spills over into multiple consumer products such as mortgages, auto loans and credit cards.

• “We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with this inflation. That’s what we’re trying to do, and I think you could take today’s action as a sign of our strong commitment to achieve that goal,” Chair Jerome Powell said at a news conference following the decision.

💡 So what: The U.S. Federal Reserve's recent decision to cut interest rates by 50 basis points, the first since the 2020 Covid-19 pandemic, has notable implications for both the economy and financial markets. Lower rates typically reduce borrowing costs, which can spur business investments, consumer spending, and a boost in the housing market. For markets, this move often brings optimism, as it can improve corporate profits and stock performance. However, it also signals concern over potential economic slowdown, which could spark volatility. Overall, this rate cut is designed to stimulate economic activity while hinting at caution for future growth.

Thursday - U.S. Leading Economic Indicators

Friday - No Major Economic News

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🖱️ Google catches break in EU antitrust case

WHAT: The European Union’s second-highest court has decided to scrap a 1.5 billion euro fine against Google, siding with the tech giant after it challenged the ruling. The case stems from 2019 when the European Commission, the EU’s executive arm, said Alphabet owned Google had abused its market dominance in relation to a product called AdSense for Search. This product allowed website owners to deliver ads into the search results on their own pages.

WHY: There has been a slew of court cases involving the EU and U.S. tech companies reaching their conclusions recently. This month, the ECJ upheld a 2.4 billion euro fine imposed on Google for abusing its dominant position by favoring its own shopping comparison service. And the same court ruled that Apple must pay 13 billion euros in back taxes to Ireland, ending a decade-long case.

✈️ Boeing furloughs staff

WHAT: Looks like Boeing staffers are about to get some unexpected "unpaid time off." Just days after hitting pause on hiring, Boeing told employees that furloughs are now in the works. This comes after over 30,000 workers with the International Association of Machinists and Aerospace Workers (IAM) rejected a contract renewal with the company and went on strike last week.

WHY: The furloughs were anticipated as the aerospace company attempts to stop the financial bleeding caused by the strikes. A Bloomberg Intelligence analysis predicted that Boeing could be out $3.5 billion in cash in Q3 if the strike continues through September.

🖥️ YouTube launches social space for creators

WHAT: At its Made On YouTube event, YouTube unveiled a new feature called "Communities," which is basically a built-in Discord server on a creator's channel. It's designed to give fans a space to hang out and interact, bringing creators and viewers even closer together. With Communities, YouTube is hoping creators won't need to use other platforms like Discord or Reddit in order to interact with viewers.

WHY: YouTube is testing Communities now on mobile devices with a small group of creators. The company plans to test the feature with more creators later this year before expanding access to additional channels in early 2025.

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