- Federal Reserve policymakers are divided on where long-term interest rates should be, with projections ranging from 2.375% to 3.75%, reflecting uncertainty about the neutral real rate (r-star). This debate highlights the difficulty in pinpointing an unobservable variable, leading to more intellectual honesty about the limitations of monetary policy predictions. The Economist
- The Federal Reserve's recent decision to cut interest rates by half a percentage point marks the beginning of a monetary-easing cycle, aiming to balance inflation control with growing concerns about the labor market. While the Fed is confident inflation will ease, the larger rate cut is seen as a preemptive move to avoid a recession, but it may face political criticism ahead of the presidential election. The Economist
- U.S. consumer confidence saw its steepest drop in three years, with growing concerns over the labor market and inflation expectations rising. While the Fed cut interest rates to bolster the economy, the weakening job market and mixed consumer buying plans add uncertainty about future growth, particularly ahead of the November presidential election. Reuters
- A growing number of U.S. businesses are delaying investments due to uncertainty around the upcoming presidential election, with 30% of firms postponing or scaling back plans, according to a survey by the Federal Reserve and Duke University. These firms anticipate slower revenue and employment growth in 2024, with expectations of permanently losing 1-2 percentage points of growth this year. Archive
- Office vacancy rates in America have hit a record 20.1%, with remote work contributing to a sharp rise in delinquencies on office-backed mortgage securities. As loans come up for refinancing, large banks, smaller lenders, and private investors may face losses, though the broader financial system appears unlikely to be severely impacted. The Economist
- Many U.S. companies avoided rising interest costs due to cash reserves and locking in low rates before the Fed's tightening cycle. However, with $2.5 trillion in loans needing refinancing by 2027, they face higher borrowing costs just as the Fed shifts to easing. This delayed effect complicates the Fed's efforts to manage the economy. The Economist
- The Biden administration has announced new tariffs on Chinese goods, ranging from 7.5% to 100%, affecting products like clothing, electric vehicles, and solar panels. This move aims to protect U.S. industries and reduce reliance on Chinese imports but could raise costs for American consumers. Additionally, a proposal to limit the de minimis trade rule, which allows tax-free imports under $800, targets companies like Shein and Temu, potentially impacting their low-cost business models. NYTimes
- A potential strike by 85,000 longshore workers at U.S. East Coast and Gulf Coast ports could severely disrupt supply chains, halting the flow of goods like bananas, autos, and industrial parts. The strike could impact 14 port authorities, including major ports in New York, New Jersey, and Baltimore, with wide-ranging economic consequences, potentially driving up prices and leading to factory shutdowns. MSN
- Billionaire hedge fund manager David Einhorn expressed concerns that the current market is "fundamentally broken" due to the overvaluation of large companies in ETFs while smaller, undervalued firms struggle to attract capital. He argues that the dominance of passive ETF issuers, like Vanguard and BlackRock, diminishes shareholder activism and corporate governance, as these funds do not push for company improvements. Bezinga
- Franklin Templeton has expanded the availability of its on-chain money market fund, the Franklin OnChain U.S. Government Money Fund (FOBXX), to the Avalanche blockchain network. This fund is the first U.S.-registered mutual fund to use a public blockchain for transaction processing and share ownership. Investors can access the fund through the Benji Investments app, using USDC stablecoin for investments and peer-to-peer transfers on the blockchain. AVAX
- Despite ongoing public skepticism, institutional adoption of blockchain technology is rapidly increasing, with financial giants like JPMorgan leveraging blockchain solutions such as its Onyx network for wholesale payments and cross-border transactions. While JPMorgan CEO Jamie Dimon remains critical of Bitcoin, he acknowledges blockchain's utility in improving operational efficiency and trust in financial markets. Cointrust
- PayPal has expanded its cryptocurrency services to U.S. merchants, allowing business accounts to buy, hold, and sell cryptocurrency directly, with the exception of New York State. Merchants can also now send and receive cryptocurrency to external blockchain addresses. This move builds on PayPal's ongoing efforts to integrate digital currencies, including the launch of PayPal USD (PYUSD). Paypal
