✂️ Is J. Pow Hinting At A Rate Cut?

Good morning. US stock futures rose in Wednesday morning trading after the S&P 500 closed at a new record high.

📊 Fed Chair: We’ve got our eyes on interest rates

📝 Our report: Federal Reserve Chair Jerome Powell warned that keeping interest rates too high for too long might put economic growth on the endangered species list. Setting the stage for a two-day appearance on Capitol Hill, the central bank leader said the economy remains strong as does the labor market, despite some recent cooling. Powell cited some easing in inflation, which he said policymakers stay resolute in bringing down to their 2% goal. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.” Powell said in prepared remarks.

 🔑 Key points:

• Powell’s commentary coincides with the approaching one-year anniversary of the last time the Federal Open Market Committee raised benchmark interest rates.

• The Fed’s overnight borrowing rate currently sits in a rage of 5.25%-5.50%, the highest level in some 23 years and the product of 11 consecutive hikes after inflation hit its highest level since the early 1980s.

• Markets expect the Fed to begin cutting rates in September and likely following up with another quarter percentage point reduction by the end of the year. FOMC members at their June meeting, however, indicated just one cut.

💡 So what: If the Federal Reserve keeps interest rates too high for too long, it could lead to slower economic growth as borrowing becomes more expensive, reducing consumer spending and business investments. This could increase unemployment as businesses cut back on expansion and spending. Higher interest rates can also decrease consumer spending, cool the housing market due to more expensive mortgages, and cause stock market volatility by reducing corporate profits and investments. While high interest rates can help control inflation, they risk undermining economic growth, employment, and financial stability if maintained for too long.

Wednesday - Fed Chairman Powell Testimony to House

Thursday - US Consumer Price Index

Friday - Consumer Sentiment (prelim)

📈 Seth Klarman shares his 3 investing principles!

💳 Trying to pay off your debt? Here are a few strategies to consider!

💰 Here’s when it’s time to get a financial advisor

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🤖 AI startup funding continues to soar

WHAT: Clearly, the tech world’s appetite for AI is growing faster than a hungry robot at an all-you-can-eat data buffet. Investments in AI startups skyrocketed to $24 billion from April to June, more than doubling last quarter’s figures, according to Crunchbase. Overall startup funding grew 16% sequentially to touch $79 billion in the last quarter, primarily driven by investments in AI, which became the largest sector for the first time, followed by healthcare and biotech.

WHY: Despite last quarter's uptick, startup funding remains low compared to the levels seen in the past three years. Global funding declined 5% to $147 billion in the first half of the year and was flat compared to the second half of 2023, according to Crunchbase.

👗 Fast fashion retailer pledges investments in UK, EU

WHAT: Fast fashion giant Shein plans to splash out 250 million euros ($271 million) over five years in the UK and Europe, as it attempts to deflect criticism for flying cheap clothes and accessories straight from Chinese factories to shoppers globally. Textile associations and politicians in Europe have accused Shein of eroding local industries by flooding the market with garments at prices domestic factories and retailers cannot compete with, partly thanks to its use of a tax break for parcels worth less than 150 euros entering the European Union.

WHY: Shein, known for its $5 tops and $10 dresses, reportedly recorded sales of about $45 billion in 2023 and was valued at $66 billion in a fundraising round last year.

📱 Social app banned by FTC from serving kids 18 and under

WHAT: In a first, the Federal Trade Commission is giving NGL, an anonymous social app, the boot from serving users under 18. The agency announced the ban, preventing NGL from marketing or offering its app to minors. In a response, NGL said it will pay $5 million to settle the lawsuit. Launched in 2021, NGL rose to the top of the app store based on its premise of allowing users to post links to their social accounts that friends can click on to send in anonymous questions.

WHY: The settlement represents one of the most significant actions taken by the FTC under Chair Lina Khan with the aim of preventing social media services from profiting from practices that have the potential to harm children.

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