Good morning. US stock futures traded lower in Thursday morning trading as investors come to terms with the Federal Reserve’s plan to keep interest rates at higher levels for a longer time period.

"Price matters, but only if one appreciates value"

Chris Bloomstran

Top News

Fed holds hand on interest rates

WHAT: The Federal Reserve played it safe and kept its benchmark interest rate parked, but signaled that borrowing costs could stay higher for longer after one more hike this year. Fed Chair Jerome Powell said officials are prepared to “raise rates further if appropriate” and maintain a restrictive policy stance until the Fed’s target range for inflation was met.

WHY: After a historically rapid tightening that took the fed funds rate from nearly zero in March 2022, to 5% in May of this year, the central bank has in recent months pivoted to a slower pace of increases.

China lashes out at “discriminatory” US moves against businesses

WHAT: China’s not happy with the US playing the “chip-monopoly” game! The Asian powerhouse has accused the US of employing discriminatory practices after the US Commerce Department said an advanced phone chip made by Huawei may violate trade restrictions. A Chinese Foreign Ministry spokesperson said such “discriminatory and unfair practices” against Chinese companies undermine the principles of international economic and trade rules.

WHY: China and the US are locked in an ongoing battle over semiconductor technology. Washington is considering new restrictions on the sales of artificial intelligence microchips following a sweeping set of export controls against China last year.

Toshiba goes private in buyout

WHAT: Toshiba will soon be saying “Sayonara” to the Tokyo Stock Exchange as the company’s shareholders participated in a 2 trillion yen ($13.5 billion) tender offer to take the electronics group private, and end its 74-year long run as a public company.

WHY: Once celebrated for its technology innovations, Toshiba paid what was Japan’s largest ever penalty for falsifying financial statements in 2015.

In Other News

US employer health care costs likely to jump in 2024

WHAT: US employers are about to get hit with the biggest health insurance cost hike in a decade according to forecasts from health care consultants Aon, Mercer and Willis Towers Watson. The consultants see major healthcare costs jumping 5.4% to 8.5% on account of medical inflation, soaring demand for weight-loss drugs and wider availability of high priced gene therapies.

WHY: Employers will increasingly use artificial intelligence to help cut administrative staff expenses as they look for ways to mitigate rising costs, all the consultants said.

Amazon says “bye bye” to merchant fees ahead of legal tussle

WHAT: Amazon has hit the brakes on their grand plan to charge merchants who dared to go their own way with shipping according to reports from Bloomberg. Effective Oct 1, Amazon was planning to impose a 2% fee on every sale by third-party sellers that shipped the product themselves. The change of plans comes as the company finds itself in the midst of a potential antitrust lawsuit from the US Federal Trade Commission (FTC).

WHY: The FTC is expected to file a lawsuit against Amazon later this month after the company did not offer concessions to settle antitrust claims, the Wall Street Journal reported.

US colleges in decline?

WHAT: Looks like the “college party” might be losing a few guests! According to a report from Fitch Ratings, more colleges and universities in the US are headed for closures or mergers, with enrollment declining across higher education institutions.

WHY: Moody’s Investor Service also said in June that it expects closures of colleges and universities to gradually increase as they grapple with financial difficulties, though such actions will still remain relatively rare.

Key Economic Events

• Thursday - Philadelphia Fed Index, Initial Jobless Claims (wk end Sep 15)

• Friday - No Major Economic News

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