✂️ The Fed Will Likely Cut Rates In...?

Good morning. US stock futures fell sharply in Wednesday morning trading as investor sentiment about tech stocks shifts.

✂️ Fed exec touts rate cut before year’s end

📝Our report: Federal Reserve Governor Adriana Kugler has hinted at a potential rate cut "later this year" if inflation cools and the labor market keeps its chill without losing too much steam. “If economic conditions continue to evolve in this favorable manner with more rapid disinflation, as evidenced in the inflation data of the past three months, and employment softening but remaining resilient as seen in the past few jobs reports, I anticipate that it will be appropriate to begin easing monetary policy later this year,” Kugler said in prepared remarks for an event hosted by the National Association for Business Economics in Washington.

🔑Key points:

• Fed officials have stepped up their signaling that they are moving closer toward cutting interest rates, though most — including Chair Jerome Powell — have stopped short of offering any guidance on the timing of such a move.

• Investors are betting policymakers will lower borrowing costs in September, according to futures markets. Officials are widely expected to hold interest rates at a more than two-decade high when they gather July 30-31.

• US central bankers said in June that they were waiting for “greater confidence” that inflation was decelerating sustainably toward their 2% target before reducing rates. Recent data has shown a renewed easing in price pressures, with a key gauge of consumer prices posting the smallest advance since 2021 in June.

💡So what: If the US Federal Reserve slashes interest rates before the end of 2024, it could stimulate economic growth by encouraging borrowing and spending, boost the stock market by enhancing corporate profits and investments, and potentially reignite inflation if not carefully managed. The housing market might see increased activity due to more affordable mortgages, but savers could face lower returns on savings accounts and fixed-income investments. Globally, other central banks might follow suit to maintain competitive exchange rates and economic stability.

Wednesday - Fed Beige Book

Thursday - U.S. Leading Economic Indicators

Friday - New York Fed President Williams Speaks

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👟 Shoe wars!

WHAT: Skechers USA is taking LL Bean to court, claiming the outdoor gear company is illegally copying its shoes, which have racked up millions in sales. According to a complaint filed in Manhattan federal court, the world's third-largest footwear company believes LL Bean's Freeport casual shoes infringe two patented designs for "heel cups" that surround the back of the foot.

WHY: Skechers sued at a time many Americans concerned about inflation keep a lid on discretionary spending. The lawsuit seeks unspecified damages, including triple damages for any willful infringement, and to stop sales of infringing shoes.

🚀 Musk plans move for rocket business headquarters

WHAT: Bye bye California, hello Texas! Billionaire Elon Musk said he is relocating rocket startup SpaceX and social media company X (formerly Twitter) headquarters from California to Texas. Musk posted on X that he plans on moving SpaceX from Hawthorne, California to Starbase, Texas. X will move to Austin from San Francisco.

WHY: Tesla, where Musk is CEO, moved its corporate headquarters to Austin from Palo Alto, California in 2021. Musk has also said that he has moved his residence from California to Texas, where there is no state personal income tax.

🤖 Amazon under scrutiny over AI startup deal

WHAT:The Federal Trade Commission (FTC) is giving Amazon's new deal with AI startup Adept a closer look, launching an informal inquiry, CNBC reports. The FTC is seeking more information about the agreement announced last month, which involved Amazon hiring key executives and licensing technology from Adept, a source familiar with the matter told CNBC.

WHY: The move comes as regulators in the U.S. and abroad are increasingly scrutinizing tech companies’ investments and partnerships with AI startups. The FTC in January announced it’s investigating Amazon, Alphabet and Microsoft’s recent AI deals, while the Department of Justice is examining Nvidia, the top maker of chips powering the AI boom.

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