Federal Reserve Rate Decision, Corporate and International News
Market reviews
• With just hours to go until one of the most anticipated central bank decisions in recent memory, traders are still agonizing over the possibility of a major Federal Reserve interest rate cut.
• A rise in U.S. retail sales on Tuesday initially pushed rates back 50 basis points to start the U.S. easing cycle, but that didn’t last. Probabilities implied by futures fluctuated early in the Asian session before settling around 65%. Expectations for overall Fed easing this year have eased slightly but remain set for two 50 basis point cuts and one 25 basis point cut over the remaining three policy meetings in 2024 — a dovish proposition given that the economy shows little sign of trouble.
• The all-important US consumer is in very good shape, with the latest data showing household net worth at a record high and debt levels at a 23-year low. From this perspective, a less market-friendly quarter-percentage-point rate cut might be more appropriate. Eurozone data will be scant ahead of the Fed's decision, with the region's inflation data for August the main event. UK consumer and producer price indices could have a bigger impact. Don't forget that the Bank of England is due to make its own policy statement on Thursday.
• The Bank of Japan will keep rates unchanged this week, with the next hike expected in December. Geely is in talks with the Polish government to get permission to build an electric vehicle plant, a move the automaker is planning to sidestep new EU tariffs. China's intentions are clear. And we're keeping an eye on Poland.
• Morgan Stanley says a 0.50% Fed rate cut this week would be the best-case scenario for stocks in the very short term. The worry, however, is that a bigger cut could be seen as the Fed acknowledging problems ahead for the economy amid a worsening labor market, slowing economic growth or even a recession.
• Amazon has ordered employees to return to offices starting in 2025, according to a memo from CEO Andy Jassy. The company's workers will be required to work from the office five days a week starting Jan. 2. Jassy explained that offline work improves learning and collaboration among colleagues.
• BYD has bought out Mercedes-Benz's stake in the joint venture, giving it full control of the premium electric vehicle brand Denza.
• AT&T has agreed to pay $13 million to settle an investigation into a January 2023 data breach at the cloud provider that affected 8.9 million AT&T customers, the Federal Communications Commission (FCC) announced Tuesday.
• The US regulator will propose tougher rules for banks working with fintechs following the collapse of banking and financial intermediary Synapse Financial Technologies earlier this year.
• Accenture plans to delay the bulk of its employee raises for six months, the latest sign of the ongoing downturn that has hurt the consulting industry as a whole. ACN shares fell 5%.
• Instagram is tightening restrictions on teens' use of the social network, giving parents more control. The company announced that starting Tuesday, it will begin placing all current and future accounts owned by a teen under a teen account.
• Battery electric vehicles (BEVs) sold in the European Union will reach an overall market share of 20% to 24% by 2025, largely due to lower prices.
• Microsoft and UAE-based AI company G42 will establish two new centres in Abu Dhabi to work on “responsible” AI initiatives.
• Stellantis has already taken steps and is working hard to avoid the risk of plant closures that Volkswagen faces, the automaker's CEO Carlos Tavares said on Tuesday.
• Intel (INTC) is suspending projects to build factories in Germany and Poland for two years due to financial problems.
• Global defense funds are seeing a surge in inflows as concerns about a slowing U.S. economy prompt them to seek assets such as consumer staples and utility stocks that can withstand weakness in labor and commodity markets.
• Neuralink has invented Blindsight, an implant that restores vision. A person will be able to see even if he was blind from birth, said Elon Musk.
• U.S. industrial production rebounded in August. Output at U.S. factories rose in August as auto production recovered, but the previous month's data was revised down, suggesting that manufacturing was still treading water. Industrial production rose 0.9% last month after a downwardly revised 0.7% gain in July, the Fed said Tuesday.
• U.S. business inventories rose slightly more than expected in July, suggesting that inventory investment could help fuel economic growth in the third quarter. U.S. retail sales rose last month, reflecting consumer resilience: US Retail Sales: +0.1% (expected -0.2%).
• The Journal reported that talks are ongoing between JPMorgan and Apple over a credit card program. The deal would involve a business with about $17 billion in outstanding balances currently held by Goldman and 12 million users.
International Reviews
• Microsoft says Russia is now waging a full-scale disinformation campaign against Kamala Harris.
• Erdogan is cajoling big business to lure investors to Turkey, the FT reports. Turkish President Recep Tayyip Erdogan will meet top US business leaders in New York this month in a bid to end a feud with international financiers and lure investors back to the country's markets.
• In Germany, the opposition has decided on a candidate for the post of Chancellor - Friedrich Merz. The head of the CSU, Markus Söder, said that he "definitely supports" the leader of the CDU, Friedrich Merz, as a candidate for the post of Chancellor of Germany in the 2025 Bundestag elections. Friedrich Merz actively advocates for military aid to Ukraine and calls for limiting illegal migration to Germany.
• Thousands of people, including Iran's ambassador, were injured in a Beirut suburb and other parts of Lebanon after their pocket pagers exploded on Tuesday, media and security officials said. They were likely hacked remotely by Israeli intelligence, causing the battery to overheat and explode. The pagers were reportedly used by Hezbollah members. More than 500 explosions were reported. Lebanon reported 4,000 casualties.
• The United States has imposed sanctions for “undermining democracy” in Georgia. The penalties will apply to individuals who “undermined fundamental freedoms, including freedom of expression” in Georgia, the press service of the US Treasury Department reported.